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Women Better in Taking Financial Decisions
From heading multi-million dollar companies, winning championships in competitive sports, pushing the frontiers of scientific research and discovery, to raising exemplary kids and families, women are shaping our everyday world in unimaginable ways. Their confidence, dedication and hard work are inspiring millions worldwide to break new grounds and achieve unparalleled success. In the current global scenario, it would not be an understatement to say that women are certainly leaping ahead of men.
While pursuing their ambitions and exploring a wide range of career avenues, women are making significant contributions to the overall growth of the economy and financial well-being of their families. They are contributing around 17 per cent of India’s GDP currently and as more employment opportunities are being lapped up by women, this percentage is all set to rise up in future. Women today are not only adding to the financial resources of their families but are also playing a key role in the management of those resources.
In the traditional Indian family set-up, money management has always been the key responsibility of the male member. With women in India shattering all gender stereotypes, a reversal in this set pattern has also been observed. Women today are reducing their dependency on their father, brother or spouse to plan their finances by taking up independent charge of the decision making process. They are increasingly participating in channelizing family income to fruitful investment options and are playing a key role in adding to the overall family prosperity.
This shifting dynamic is a positive development in bringing about more effective utilization of resources at the individual, family and economy levels. The reason for this is simple women are better than men at managing finances. Our mothers, who for years have been successfully managing the household expenses within a limited budget, are proofs of the validity of this observation.
Various studies abroad have substantiated and reinforced the view that women are better investors than men. According to one research by Fidelity Investments, women not only save more than men, their investments also earn more returns annually.
Another study by Rothstein Kass Institute showcases how hedge funds run by women outperformed a broader benchmark. While this finding may come as a surprise to some, those familiar with the following traits of women understand the reasons why they are smarter than men when it comes to money matters.
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Better at budgeting
Time and again, women have shown through their management skills that they are better at budgeting. They effectively handle household income and expenses to provide a comfortable lifestyle for their family.
Most of us have witnessed our mother or grandmother dividing the money into different jars or envelopes earmarked for various expenses such as food, clothing, education, etc. This trait helps to cut unnecessary expenses and ensure that the optimum amount is diverted towards savings and eventually investments.
Budgeting is a pre-requisite for effective financial planning and acing this trait lays the foundation for women to build their finances security.
Long-term perspective
A peep into the history of women savings and investment in India reveals that a majority of them accumulated funds over a long period of time to use those funds for special occasions or contingencies. This approach towards savings and investments is a distinctive characteristic of women investors.
It has been observed that instead of chasing short-term gains, women tend to work towards medium to long-term financial goals. Any financial planner can vouch for the fact that a long-term perspective towards savings and investments is the key to build wealth. Their long-term thought process ensures that women investors have a head-start on the journey towards financial well-being.
Disciplined approach
Achieving any long-term goal requires persistence and patience. Disciplined saving and investment are pre-requisites to accumulate a healthy corpus of funds for fulfilling major life goals. Women are known for discipline in their approach towards money management.
Every month they set aside a certain sum as saving from household income which they traditionally invested in gold. With rising awareness levels and increasing availability of attractive investment options, women have started showing interest in diverting these savings to mutual fund SIPs to earn better returns.
This dedicated approach towards investment makes the magic of compounding work for them and thereby set them up for long-term success.
Willingness to learn
Building a financially secured future has become one of the top priorities for women everywhere. They are keen to explore investment options that can help them to make the most of their savings. Though men have customarily taken care of money management on their behalf, women now want to take the lead in financial planning.
They are willing to learn the tricks of the trade in order to take independent charge of the money management function. They are open to accept their shortcomings, seek advice and make amends in the course of their financial journey. This attitude towards learning makes them more confident and well-equipped to efficiently handle their money.
Analytical thought process
Women bring unique strengths to the decision-making process. Studies show that women adopt an analytical approach to decision making more often than men. To address a problem, women showed reliance on data, while men inclined to go with their gut or intuition.
Women take time to weigh the pros and cons of their decision and are generally quite calm while making a critical choice. This attitude is different from men who have been found to be quick in making judgments and less likely to examine facts that might prove them wrong. This attitude gives women an edge in making rational financial choices that have a long-term impact on their financial well-being.
Let us appreciate women for the strength and stability with which they make crucial life decisions. It’s time that we realize the true potential of women in moulding our life, support and encourage them to fully tap their potential. This cohesive awareness and acceptance on our part will accelerate our pace on the course of growth, happiness and financial well-being.