In modern times, women are financially independent and increasingly earning more income. Improved life expectancy, early retirement, break in the career to pursue personal goals; all contribute to the need of having a systematic financial plan. But, women tend to be more conservative in their approach towards financial well-being.  Lack of confidence, financial illiteracy, age old male dominance and scantiness of time has led women to believe that they are inferior to the male counterparts.

5 Mistakes that Women Make When it comes to Money

  1. Not Investing

According to Global Wage Report 2018-19 published by International Labor Organization (ILO), women are paid most unequally. On average, women are paid 34% less than men in India. While savings are less, the cost of living and the rate of inflation apply similarly to both. All the more, the life expectancy of women is higher as compared to men. This means women require a larger corpus to fund their retirement needs. Thus, being too conventional about investing not only eats into the returns but also has a more negative impact on the value of retirement corpus.

  1. No Active Participation

Although most of the women are money managers and budgeting experts at home, when it comes to investing, the onus on making financial decisions is put on their spouses, fathers or relatives. In majority of the cases, women have no knowledge of the investments made by their counterparts on behalf of them and are left clueless after the passing of any unfortunate events (divorce, untimely death, etc).

  1. Procrastinating investment decisions

When it comes to finance, when one starts investing matters more than how much one is investing. In the example given below, Ms. Early started her investment journey with a mere contribution of Rs. 50 thousand annually, whereas Ms. Late shied away from it initially but started her investment journey with thrice the amount later. At the end of the term, the cost of procrastination for me Ms. Late amounted to an approximate value of Rs. 12 lakhs.

Particulars Ms. Early Ms. Late
Annual Rate of Return 12% 12%
Investment Term 25 15
Annual Investment/Savings 50,000 150,000
Total Investments/Savings 1,250,000 2,250,000
Total Value at end of Term 7,466,697 6,262,992
Cost of Procrastination 1,203,705


  1. Financial Illiteracy

Despite of educating themselves on money matters, women tend to transfer the responsibility to the men in their family; they find the task very intimidating. There is a mind block when it comes to investing or understanding different financial products.

  1. Choosing Investment Products

Managing daily expenses and only investing in jewels, gold and savings account cannot be the base of a portfolio. This lack of awareness can be detrimental to their long-term goals, especially retirement.
Investments also need to be in product that are diversified and have the potential to earn higher return and beat inflation in the long run.

5 reasons why women need financial planning

  1. Increasing number of working women

Larger numbers of women, urban as well as rural are joining the workforce at junior, mid and senior level of management. As income rises, the need to manage the finances also rises.

  1. Pay Gap

Women all over the world earn less in comparison to their male counterparts for the same level of work. This income disparity has a negative impact on the savings that can be set aside for future goals.

  1. Inheritance

Gender inequality is becoming a thing of the past. Women, by and large, are increasingly inheriting ancestral properties. Due to the changes in Hindu Succession Act and Indian Succession Act, women have legal claim in the wealth of their parents even after marriage. This inheritance needs to be managed efficiently.

  1. Higher Life Expectancy

Generally, women live longer than men and need to manage their life thereafter individually without any outside help. With an increased life expectancy comes the additional financial burden of creating a larger corpus by retirement in order to sustain the same standard of living.

  1. Career Break

Often women are compelled to take career breaks for family and/or children. Finances need to be properly managed so that the irregularities in income can conveniently be managed so as not to damper the financial well being of the individual.

Thus, in an era where women are progressing at an unprecedented rate, we need to make sure that they are taking care of their finances and taking all the right steps to invest wisely and protect their capital. They are natural savers and planners; many just don’t realize that they can surpass others when it comes to making their own financial decisions, all they need is a right track to start and they can flourish more than anybody else.