Men, You too need women to be financially prudent.

In the last blog post, we wrote about need for women to be financially prudent. This sequel is for men to change their attitude and actions to complement a woman's efforts for achieving financial prudence. We purposely chose to write first for women knowing the men's attitude towards women's financial illiteracy. We want women to be aware, convinced and assertive with right background to attempt and demand. Once a woman is well equipped, she can strive confidently for the purpose. Now we want to make men sensitised to the attempts by women and respond positively so that it achieves better good for both. The men might ask here, what is better in it for them? Their typecast opinion about women getting into financial matters might make them believe that it's futile exercise for both. But here is what men are going to gain from this initiative.
1. Reduced whimsical demands from woman because of complete view of financial position of family
2. Rational, non emotional approach by woman to necessary financial decisions
3. Improved decision making due to additional brain power of woman
If you are still not convinced, just give it one chance to test whether or not it works. No harm!
So, what  should a man do consciously to bring woman up to the mark? TEAMwork. Read on...
Transparency : keep complete transparency in the family finance data, records, process, events and decisions with woman.
Explain : just transparency is not enough, explain patiently your way of taking financial decisions right at the time of an event.
Accept : accept woman's questions, doubts, concerns, opinions and larger goals in the decision making. Afterall she thinks mostly for entire family and not just for herself!
Motivate : empathize with her and motivate her to participate and contribute to financial decisions despite temporary setbacks.
Let us take you through some illustrative situations to show you the right way instead of present approach.

Situation 1: family vacation
After 3 years, you think of taking a family vacation this summer with little extra budget. You know how much leave travel allowance you (and your wife, if employed) are going to get. Based on your cousin's experience, you decide a religious places trip to Varanasi and nearby holy towns for 8 days. You announce this well in advance to make train bookings etc. You expect your wife and kids to be happy but find that they are not as much. But you ignore them assuming that they have no idea of the whole process. This becomes your sole decision and your wife just accepts it to avoid conflict.
Instead, consider the new way of transparent decision. When you think of taking a family vacation this summer with little extra budget, you share your thoughts with your wife. You disclose the allowance you are entitled to and ask her how much she is entitled to get. Then you indicate your preference of religious places trip up north based on your cousin's experience. She may ask you to give her some time to come out with another option and you agree. Next Sunday, two of you again discuss when she brings up her preference of Nepal trip based on her office colleague's experience. You show her the costing of religious places trip and ask her to make same for Nepal trip. Now that she is aware of your total budget and the way you made costing, she also makes a costing for Nepal trip. While your plan is for 8 days vacation, she makes a 5 days plan and brings the cost just 20% higher than yours. For the extra amount, she points out to a bank deposit maturing just a month before vacation thereby giving you surplus funds. You point out to her about the additional expenses after summer vacation for kids' new school year. But based on complete financial picture, you agree to Nepal vacation. Or she agrees to your religious places vacation. In either case, both of you enjoy vacation to the fullest knowing in the back of mind that you have taken decision with financial prudence.

Situation 2: change in investment
On a Sunday afternoon, you realise that a bank deposit in your wife's name is going to mature in a couple of days. You simply tell her to close the FD and get amount in her account. When she asks why not renew, you tell her that interest rate is quite low. Then she asks you what to do with the large amount upon closure, you tell her that it would be invested in a mutual fund. You print the mutual fund form and ask her to sign it while you fill up the details. When deposit money is available in bank account, you tell her to write a cheque. Then you tell her to submit the form and cheque in the mutual fund office which is on her way to work. When she asks you why this fund and what are other options, you ask her to check the websites of 10 mutual funds. She gives up and retorts that she is investing in a mutual fund without mutual understanding. You feel her pain but laugh it out.
Instead, consider the new way of explaining. One Sunday afternoon, when you and your wife are discussing finance, she tells you that her bank deposit is about to mature in next week and she intends to renew it. You ask her if she has considered other options and decided so? She says that she has no knowledge of other options. You then explain her the process of making decision for fresh investment. First, you ask her to check if there is any need for money in next one month so that it should be kept aside. She doesn't see any such need in near future. Now you make her check the rate of interest on renewal. She checks from the bank's website and notes down the highest rate and tenure. Then you show her a website that compares interest rates of various banks for various tenures. You tell her how it is unsafe to deposit money with few banks that offer high interest rate. Thus you guide her to zero in on a safe bank that gives rate higher than her current bank. Now you introduce her to mutual funds and briefly explain how it works. You show her a website that collates all analytical information about all mutual funds. You take her through the process of choosing a suitable mutual fund based on the tenure of investment and risk appetite. After this, you tell her how to purchase mutual fund and how to track it. Thus you enable her to invest knowledgeably.

Situation 3: selling your second flat
You have decided to support your daughter's foreign education in masters and working out how to raise huge amount required. You come to the conclusion that you must sell your second flat you purchased 6 years ago as investment. This is a big decision so you talk it out with your wife. You show her your cost work-out. You show her your total joint liquid assets value. You tell her about your idea to sell second flat to bridge the gap in funding. You also explain her the process of selling and legal precautions etc. She asks the basic question why not take educational loan? You simply reject the idea because you are against taking any loan at this near retirement age. She still questions if there is any other option better than selling the flat. You say you are not aware and she could find out on her own. She doubts whether the flat will be sold in time to get money in hand when needed. Now you become sarcastic calling her pessimistic. She still gathers courage and mutters to keep in mind that we have a younger son whose future aspirations also should be kept in mind. You are so much sold to your thought of selling that you pretend to give up and suggest her to take full responsibility of raising the required money. And you add that she should not expect any help from you in this process if she chooses to take responsibility. In a sour mood, she gives up and requests you to go ahead with selling the flat.
Instead, consider the new way of accepting her opinions. You are working out the costs of your daughter's foreign education coming soon and involve your wife and daughter both. You accept inputs from both of them about costs but point out if something is unnecessary. Once the total cost is estimated, you bring up your family financial position. You explain them availability of funds. All three of you realise the funding gap. You suggest selling second flat as one option. Selling gold is an option suggested by your wife. Your daughter suggests taking education loan. They ask you the process of each option - selling flat, selling gold and taking education loan. While you explain the process for flat and gold selling, you ask your daughter to explain the process of getting loan. Thus all of you are aware of the complexity and risks. You also mention your personal opinion of not taking any loan. Your daughter gives her opinion that she doesn't want the family assets to be sold for her education. She also assures that barring first couple of years, she would take responsibility of repaying the loan. Your wife suggests you to check with a real estate broker to get an idea of time taken and market value of the flat. She asks daughter to get details of education loan from two banks so that we can compare. Three of you decide to discuss again next Saturday with market information. The discussion ends with unanimity and action plan.

Situation 4: buying online after bad experience
Your wife tells you that she would like to buy a mobile phone online. You tell her how she had done online air ticket booking on her own and ask her to proceed. She fumbles because it had been a horrible experience for her due to incorrect date of journey resulting in cancellation charges and higher cost of rebooking. You know that but still test her courage. She wears confidence and asserts that she knows everything about online payment. In order to deflate her confidence you ask her a few questions about mobile specifications and she gives up calling for your help from beginning. Then you take her through mobile selection process online pointing out notoriously how she could have made mistakes. You finally make a best selection for her and also make online payment upon her insistence. Thus your supremacy in online buying is proven and you leave your wife as a woman with lost confidence. Do you call this a win-win deal?
Instead consider the new way of motivation. Your wife says she would like to buy a mobile phone online. You agree and ask if she needs your help. She points to her previous horrible experience of online air ticket booking in which she made a mistake in journey date causing cancellation charges and higher cost of rebooking. You pat on her back supportively and soothe her saying it could have happened with anyone else too. Regarding money lost, you confirm that it was joint money and she should not feel solely responsible. You insist her reassuringly to drive the online buying and you would support her all along. When she opens the online shopping app and starts browsing mobile phones randomly, you explain her how to shortlist based on certain specifications. Then you show her the comparison feature which places the selected mobiles side by side. When she finalizes one phone, you show the higher and lower variants and help choose the right one. You make her check once again finally before going to payment screen. Then she takes over the ordering and payment steps confidently on her own. With this approach, you actually rebuild a woman with confidence and financial prudence.

Need for women's financial prudence

The times are changing. Especially for women because the new possibilities of education, career, business, social life and politics are dawning for them. Many women are showing capabilities that hitherto were unknown even to themselves. While it is still a long way to go for a model gender equality, there is no doubt women's confidence is ever increasing. However, when it comes to managing finances at home, most women feel less confident. There are exceptions like those who own an enterprise or work in the decision making positions in corporate sector. But a vast majority of women find themselves weak in financial aspects.
We are talking about the women in their family comprising husband, children and optionally parents in law. The single women are compelled to manage their own finance but some feel helpless and short of resources in financial matters. We are talking about the women in all strata like urban and rural, educated and uneducated, rich and poor, formally employed and casual workers, liberal families and orthodox families. In a household, the woman might be managing monthly purchases but may not know how investment decisions are taken. A woman might be booking a deposit in her bank or signing a cheque for mutual fund but may not be aware of the options available. A lecturer in economics may be investing in an unstable bank giving higher interest rate at the behest of her father or husband. A young saleswoman might be saving a handful from her meagre income every month but may be pooling her saving in an informal group 'ponzy' scheme due to the lack of knowledge of more fruitful options like mutual funds. There could be thousands of such common cases and also hundreds of uncommon cases of financial dealings of women. These point to the need of improvement in financial understanding of women, in the current context of changing lifescape of them.
So, what is it that the women of this era should do? Should they undertake some course giving basics of finance? Should they strive to learn Stock Market investing? Should they acquire skills to use financial tools? Actually, no. What women need is neither text book knowledge in finance nor the cutting edge tools of  speculative trading. All they need is a all round, go getter type wisdom. That's why we call for Financial Prudence in women.
So, what is financial prudence? Or, what needs to be done to achieve financial prudence? To start with a positive note, we admire women's ability to adapt to the situation,be it one with financial bonanza or be it one with financial hardships. It is the woman of the house who takes it in a stride herself first among others. Going beyond, the woman of the house builds confidence in the other members' mind, including school going child and the male partner. The woman can make a budget for the house and stretch it to either side, luxurious or frugal based on the financial context. While this unique characterstic of a woman should be applauded, it must be noted that she lacks in the big picture of finance of a family as a going concern. And that is what we are talking about financial prudence.
We will get into this financial prudence of women with a question and answer style.
Question : What is meant by having financial prudence in myself as a woman?
Answer : Financial Prudence means ability to judge the money position of a family unit (within the circle of influence) and do the cost benefit analysis at a major decision point. There are two parts in this, first 'to judge the money position' and second 'cost benefit analysis'. The money position comprises the income, the outgo, the assets and liabilities. If you know the money position of your family unit, it helps. However, it is also important whether you know the money position as of today. As the four constituents keep changing, it is impractical to know the money position on daily basis. But any information older than a month is not considered as reliable in money matters. The cost benefit analysis simply implies identifying perceived benefits and looking at costs that need to be paid then evaluating if the benefits are worth the costs. This analysis may be done even on a piece of paper, if not in mind.
Question : OK, if I do not have financial prudence, what difference does it make as a woman?
Answer : Mostly women tend to buckle down while taking a significant financial decision. They are unprepared with the money position and unaware of the cost benefit analysis. The risk they see at such incidence is beyond their mental capability to handle. Therefore most women turn to the decision making man, either husband or father or son, in their family unit. Or the woman delegates the job to such man and expects to be informed of the decision only. There is no active participation of the woman in the decision process. As a result, in the next incidence, the woman may not even get to know the decision made by the man. Thus the woman gets relegated slowly to the oblivion in the decision making. On the other hand, if a woman persists to take the decision despite lacking financial prudence, she makes the decision merely on emotional, sentimental basis. Such financial decisions are bound to fail more often than not, thus resulting not only in money loss but also the loss of confidence for that woman.
Question : If there is a trustworthy man in my family, why is it necessary to have financial prudence in myself as a woman?
Answer : True, financial prudence not at the cost of relationships in the family. But if it is just an excuse to skip getting into 'boring' financial matters, the woman must think twice. What if your man is sick in hospital or traveling abroad for business when a decision incidence appears next? What if your man actually expects you to participate actively in financial decisions? What if your man passes off leaving behind money and assets that you will have to manage? In general, you should yearn for equal status in the family by being assertive, not aggressive. This requires you as a woman to have financial prudence.
Question : Give an example, how would a woman with financial prudence deal with a real situation like planning a holiday abroad?
Answer : That's a good example because a family trip abroad is a dream every woman has. The actual trigger happens when you and your spouse realise that you are going to get good bonus this Diwali. Usual scenario is this: you find out the cutest destination from acquaintances; your husband comes up with a different one; the emotional fight resulting in either your choice or cancelling the plan and in case your choice then financial burden. As a financially prudent woman, you decide to take the lead and note down various aspects of such a first time big ticket plan, such as essential costs and descretionary shopping limit, weather and geographical preferences, outdoor activities preferences, air travel and visa considerations, food and cultural preferences. With the knowledge of current money situation and upcoming major expenses including ones after holiday, you discuss with your husband. First you tell him that you would take lead and plan. Then you two discuss over individual preferences of the various aspects and reach a common understanding which includes a range for budget. You keep couple of options for destination to evaluate cost benefit comparatively. Now you ask your acquaintances if anyone has any information about your chosen destinations. You try to find out specific information like visa process and fees or hotel charges from online search. If you are not that savvy, you take help of your knowledgeable kid or husband. You put down the observations in a tabular form on a piece of paper with a rating or a number for the parameters considered. Once all costs are estimated, you work out the total cost of each destination. You also add a contingency amount to accommodate any unknown factors. Now, with the non cost parameters and cost amounts side by side on paper, you discuss with your husband. If the costs are within your preset limit, bingo, you are done. If not, two of you could decide whether to take a personal loan or rework with different set of destinations. Isn't this a practical and logical way and not much difficult? Unless of course you want your emotions run over the logic!
Question : But how do I know the current money situation in my family?
Answer : Knowing current money situation in your family is very important for financial prudence. Though it is boring, it is not rocket science for a woman. Remember money situation comprises income, outgo, assets and liabilities. That is, current income, expected outgo, current assets and expected liabilities. If your husband monitors these on periodic basis, then you make sure to attend his work next time he is going to update. If he doesn't, you two decide a suitable day of month to spend an hour together to assess your money situation. The current income comprises the salaries, interest and dividend received or expected in next month. The expected outgo comprises routine monthly expense and any special expense foreseen in the next month. The current assets include the value of the investments and real estate, gold etc. The expected liabilities comprise your outstanding loan and credit card balance. Knowing this information on an ongoing basis necessitates documenting it every time you work it out. For this you can use an Excel spreadsheet or Google sheets or appropriate app. In your feminine world of imagination, this task is boring but mandatory for having financial prudence.
Question : If I am a home maker, why and how should I ask my earning husband all money details?
Answer : Well, this is a common mind block for majority of women. Why ask if I am not earning? Because you are very much a responsible partner in family. If your husband can ask you about dinner plan and what does he like and what not even if he doesn't fill his glass with water, you can ask him details of income, assets etc. If your husband considers you as an equal partner in family, he won't mind. But if you don't ask, don't expect him to come to you to educate you. If he is an old style super egoistic dominant man, then you have a difficult task of finding out but not impossible one. If you are determined, you can find a tactical way to approach him. This depends upon the chemistry in your relationship. First of all, you should be convinced that your 'home making' is not worthless, it has some monetary value. Secondly, you and your husband must understand that in case he is sick in hospital or traveling abroad for business you will have to handle any financial situation hence you need to know. In fact, you can discuss with your husband to include some respectful amount as your income in the calculation and also put the same amount in outgo part. This will keep unaffected the overall money position but will give you a tremendous confidence in attaining financial prudence and gender equality.
Question : Even if I know the money position, how to do cost benefit analysis? For example, money for major hospitalization.
Answer : Generally women are good at cost benefit analysis in day to day life like buying new crockery or exchanging kid's old cycle for new. When it comes to unusual situation and a large amount involved, a woman lacks confidence. You should not because if you think calmly, you can use the same process in a bit formalized manner. Let's consider the example : your husband has been hospitalized and you need to arrange one lakh rupees. First you need to find money in your hands and then how to make up for whatever short. So, check the bank account balance of all accounts. Think of how much you need to keep as safety in account and remaining amount is available. This is the cheapest money available because there is no penalty for withdrawal and interest loss is lowest. Suppose, you have ₹25,000 available from bank accounts. The shortfall is of 75,000. Next, you look at the assets like fixed deposits, PPF, shares, mutual funds, gold, real estate whatever you have. All of these give you some gains like interest, capital gain, rental income. You need to find out which one can be liquidated to get 75,000 with least impact on gains. Bank fixed deposit liquidation may attract penalty. PPF may be locked in. Shares may give good value but the time to get money may be longer. Thus, think about each asset and zero in on one or more of those to make 75,000 with least impact on gains and faster liquidation. If you can't make the required shortfall from your assets, you will have to borrow. Again, find out various options like loan against fixed deposit, loan against PPF, loan against shares, loan against gold instead of thinking straight of taking personal loan. You might save a lot by simply taking loan against gold. This is nothing but cost benefit analysis. There are no formulas, no processes, no tools required. It just needs you to have confidence and such confidence can come only if you know the money position. Once you go through this process of cost benefit analysis, next time you will not find it as difficult. After going through few times, you will be alert all the time about the money position and be prepared for cost benefit analysis when the situation warrants. This is nothing but financial prudence!
Question : Suppose I have financial prudence, but what if I fail after taking a major financial decision?
Answer : No one can guarantee success in making financial decision. What if your decision goes wrong? Instead, let's consider what if a decision taken by your husband goes wrong. He feels the stress, frustration, anxiety. But you support him. It would be the same way if your decision goes wrong. Why think that the financial decisions made by a man never go wrong? But the man usually takes it in stride, learns from the experience and faces next situation without hesitation. So, a woman - being same human - could also go wrong. But if you declare that you won't get involved into any financial decision henceforth, that is a bigger wrong. Because you would deprive yourself of the learning from experience. Because you would make your husband repent for sharing or delegating to you. Because you would declare that women are incapable of having financial prudence. So, in case your decision goes wrong, admit that it went wrong calmly, ask for moral support and find out what is the learning. Take a deep breath and tell yourself, "I have learnt my lesson, now I am better prepared for next situation."
Question : Ok, that's good enough, how should I keep the essence of this whole discussion in mind for my day to day life?
Answer : Let's wrap this topic of Women's Financial Prudence in four necessary action items you need. Say loudly while reading the following text :
I need to

1. Participate actively in financial decisions
2. Know the money position of my family
3. Analyse costs and benefits objectively without sentiment
4. Learn from the outcome of my decision, right or wrong