Sunday, August 9

Financial literacy is the backbone of women empowerment


Women empowerment is an action that raises the status of women through education, awareness, literacy, and training. It’s all about equipping and allowing women to make life determining decisions.

The question is, will women have higher financial literacy if they achieve empowerment? This is quite subjective as many women today still depend on their spouses to manage the household finances, although they are very much empowered at work and in the society.

I grew up in a typical Indian household where even though both parents worked, the father is deemed the leader of the family and he manages the finances of the house. My mother with her limited education background that comprised only primary education worked for almost three decades.

She would always hand over her salary to my father and he will then proceed to give her money for her expenses. My father was a very generous man and perhaps one who was not so conscious of his expenditure.

Though he earned more than my mother, he always spent almost all his income. My mother, on the other hand, would try to save at least 50 per cent of the money given for her expenses. In fact, her savings were even used to purchase a property which has been rented out.

My father passed away three years ago, and besides the emotional lost and grief, my mother is financially secure and not dependent on anyone for her expenses. She has her savings which she has invested well in and her rental income.

I have always been amazed by how a woman who is not well-educated managed this despite being married into a culturally strict family and always felt that if my mother was empowered to manage the family finances since day one, she would have aced that job with perfection.

Having seen my mother, I always thought all women, especially the working ones were like my mum, but today, I am alarmed to share an information that I stumbled upon, which is quite enlightening for me as well.

Recently, I read a research on the correlation between gender gap and financial literacy, which indicated that women generally display lower financial literacy and confidence than men. This situation is a threat to empowerment and leaves them prone to potential risks.

Because, sadly, most women are more likely to leave financial planning to their spouses. Surprised that this is the scenario in today’s world which emphasises on feminism? Well, this is the truth.

In general, women have longer life expectancy, lower lifetime income and career interval due to child bring up. Nothing is certain in life, women may spend at least part of their life as widow, divorcee or single women, so they should prepare themselves with higher financial literacy, rather than solely relying on spouses to handle their finances.

Truth is, women empowerment will be incomplete without good financial literacy regardless to one being a housewife, in the workforce, rich, poor, educated or not. Women need to play an active, equal part in household finances as this can be a start towards achieving better financial literacy.

Here are a few things which women can start off with to kick start the journey towards financial literacy;

Stay involved and connected

Engage in home finance discussions. Expressing your ideas, opinions and concerns to your spouse not only increases your involvement but also enables you to be aware of what is happening in your household.

Usually, the natural instinct is the husband takes lead and the wife takes a backseat, which clearly has to end. Agreed, not all discussions are smooth, and some may get bitter; do not give up, take a time out and try to approach it again in a different manner.

Both parties need to know what is happening at all times. Be sure to schedule a monthly review for both of you to assess where you are. Believe me, “men are not better and are as bad or as good as you in managing money”.

Women need to be aware of the family expenses, savings and investments, household debt and the insurance policies owned. These ensure security and helps them be confident in handling situations, no matter what happens. I have personally witnessed situations where the husband had a sudden death and the wife was totally oblivious of their family finances, insurance policies, savings, investments, assets and debts. This is dangerous, especially when you have to automatically step up and lead the family now.

Start your own savings and investments plans

Start small by having your own saving account which you can follow up with an investment account. You can then proceed with a retirement plan and an emergency fund for yourself.

These are all essentials that will come in very handy to you at certain phases of your life. If you are not sure of how to go about doing these and are unsure of its benefits and processes, its best to engage with licenced, independent financial advisors or planners who will provide non-biased advice to ensure you are on the right track towards financial security.

When you are financially secure and have your personal savings, you are free to use it whenever needed without the worry of needing to get validation or consent from another party, which is usually the case with most couples having joint accounts.

Develop reading and learning attitude on personal finance

I improved my financial literacy quite significantly through reading. Sounds simple but that’s the truth! Reading on financial aspects opens up a whole new knowledge trove that introduces you to cash flow management, budgeting, investments, risk management and the proper financial behaviours needed to achieve financial security.

Equipped with this knowledge, you are now able to have enriching discussions on finance, able to handle financial risks and dilemmas, manage your cash flow wisely and even lead the household finance.

Your spouse’s perspective towards you will also change, where your advises and opinions will be taken seriously. You will be listened and appreciated for your knowledge.

Actively communicate your priorities and plans

Just because you are a family does not mean your priorities and plans are always aligned. There are times when they differ; you may want to go to Europe for a holiday and your spouse might want to go to Australia instead.

Or you may want to have a baby while your spouse does not. Its normal for life partners to have varying plans for the future but it is equally important for both parties to communicate each other’s priorities and long-term plans.

For example, your spouse may want to buy a new house, but you know that the children’s education is priority for now and you don’t want to jeopardise this for now by splurging for a new home.

This is when you need to reiterate your prioritises and rationalise well. Listen to each other and maintain open discussions. Once both of you have clear financial goals, the next step is working towards the common goal, hence communication is key to ensure those goals are crystal clear.

Real women empowerment can only be achieved by the raise in financial literacy and by closing the gap between men and women when it comes to financial knowledge and security.

Whichever gender we may be, it’s on each of us to support and champion each other to be inclusive and for equality, which would lead to an empowerment that ensures true financial success and security.

Gunaseelan Kannan, a licensed financial advisor by Bank Negara Malaysia and a licensed financial planner by Securities Commission (CMSRL/B4198/2013), is currently pursuing his PhD research on financial planning and financial technology. He also lectures on accounting, finance and business fields in Asia Pacific University of Technology and Innovation (APU). He is the Malaysian Financial Planner of the Year 2018 and 2019 Award winner (1st Runner Up), from Financial Planning Association of Malaysia.He can be reached via email at [email protected]