Mumbai: The first question you need to answer is whether you are financially dependent or independent? Fundamentally, if you are working and earning it is quite likely that you will be independent. This is not to say that a housewife cannot be financially independent. Given our Indian society chances are that a housewife will be dependent.
The ideal situation naturally is to be financially independent because financial independence provides emotional empowerment and this empowerment can only come if there is wealth in your name. Hence, there are two scenarios that emerge and financial management in each scenario is quite different, whereas the primary risks that women face viz., absence of husband, family squabbles, separation, divorce, child support are quite the same. Let’s understand how and why?
Scenario 1: Married and financially dependent Given this situation, it is likely that a woman is not privy to family’s financial decisions. Besides for each monetary requirement the woman needs to ask and in many cases has to have an approval for the proposed expense. More than anything else this scenario can create a gradual build-up of low self-esteem. What is most critical here is to build a safety wealth net. There must be investments in the woman’s name. The starting point for this is the gifts, money and inheritance received from her family. Thereafter, it could be gifts from relatives, husband and savings from monthly household budgets.
On a lighter note, actually it is nice if a system of receiving an annual birthday/anniversary gift from the husband can be initiated. Such investments then should ideally be oriented towards instruments having high dividend or high earnings possibility and having a mediocre to high risk profile, given that the wealth must grow well. The precise quantum of safety net is ofcourse hard to comment but say an amount Rs 10 – 15 lakhs would be a fair target to start with. Life insurance is completely irrelevant here and hence money could be used more productively elsewhere. Finally, just the way you know where all the things in the house are, do you have all relevant investment and legal documents? Or atleast know where they all are?
Scenario 2: Married and financially independent The first decision here is quite interesting and generally not thought of. Which name to use, maiden name or husband’s name? This decision rests on the depth, integrity and commitment of the marital bond. This is more of a legal, logistics and administrative issue but its impact can be far reaching. It is ideal to have all documents from passport to investments uniform. It is for you to decide, however whichever decision is felt appropriate, it will continue perpetually and in case things have to be reworked you will have to keep a track of all the places where you need a change of name. Only after there is ample clarity on this should you proceed with purchase of assets, joint holdings and fair distribution of expenses.
While purchasing assets if you are contributing for e.g. EMI’s (equated monthly installment) for home loan, please ensure that you are joint owner of the property/asset. While doing investments, it is good to have joint holdings but you must be the first holder or primary investor and the joint holder should be ideally the person who you would like to bequeath the investment to. Don’t forget to nominate where necessary. Talking about expense distribution most people tend to make serious errors here. The distribution of expenses should ideally be in the same equity as that of earnings or contribution to running the household. In many instances, earnings of one spouse’s go towards investments and the other persons earnings fulfill household expense requirements. The fallout is that most assets are only in the name of one person and in times of trouble and trauma whether legal or emotional this arrangement could be fatal.
There are two other issues that women face in this scenario, career disruptions due to relocation of husband or relocation at time of marriage itself and second issue being the case of childbirth. The latter is an emotional decision and a lot depends on the family support systems and the amount of time the mother wants to give to her child.
However, a prudent method would be to very objectively analyse and understand who stands where in terms of their respective careers and for whom relocation would be a greater compromise? The person who has to compromise lesser should follow the other… logical?
Next we shall talk about financial strategies for separated but not divorced women.
(Kartik Jhaveri, an expert at Financial Planning, is a Certified Financial Planner and a Chartered Wealth Manager. )
Disclaimer:The contents of the above articles are the intellectual property and copyright of the author, Kartik Jhaveri. No part may be used or reproduced in any form or manner. If you choose to act upon the information contained in the above article it is at your own risk. This article is purely educative and you are strongly advised to consult an expert prior to taking any significant decision.
Comments
0 comment