December 2, 2022

Donalds Hobby

World Finance Reviews

Change your spending habits to ensure financial independence!

That women struggle with getting habituated to being vocal about financial matters and controlling their finances because of gendered stereotypes, is well known. While more and more women are being inducted into the folds of financial inclusion, there is seldom any acknowledgement of how many women struggle with changing their deeply entrenched habits. For instance, women who are accustomed to their husbands, brothers, fathers or partners managing their money may find themselves having a hard time decoding the breakdown of their savings, investments and expenses in the initial phase of their financial planning journey.

Shalini Jaiswal (name changed), is the owner of a bespoke couture brand in Ranchi, Jharkhand. From being a full time mother to her five-year-old to deciding to start her own clothing line, Jaiswal clearly remembers that managing finances in the early days was the most strenuous part of the journey. “Like many other women in India, I come from a family, where it was deemed more important for young girls to learn household chores than managing money. After marriage, I was more than happy with finances being my husband’s autonomous responsibility. But, when I started my business I realised I would have to imbibe money management tactics,” says Jaiswal.

As Jaiswal focused on establishing a client base, her husband took the lead in setting up the financial apparatus for the brand. She narrates, “He laid the building blocks and also taught me the basics of financial management. He made it very clear that sooner or later I would have to take an active role in it. While developing an understanding of the concepts came easily to me, I had a harrowing time unlearning many of my lifestyle habits and my attitudes towards money that had become so deeply rooted since childhood.”

Aditya Birla Sun Life Mutual Fund has started a special initiative called For Her that focuses on financial inclusion of women and intends to provide them avenues for financial security.

Jaiswal’s tale is an example of how the lack of knowledge about finances makes the exercise of money management tough for women in the initial days because of age-old habits that become hard to unlearn. Women who do not have independent income streams or who have never played any active role in financial management of the family beyond the customary household budgeting may have a warped notion of how day to day habits impact overall financial health in the long run. The sense of complacency that comes from knowing the male members are fully in control of the monetary situation of the family and will be well-equipped to deal with troubling circumstances, can make them feel that they do not need to be financially disciplined.

For Ashna Saluja the realization that the ingrained stereotype of females not having to bother about finances was a harmful one hit her two years after she became financially manageable. “The first year I left no stone unturned to fulfill all my whims and fancies. It was only after I saw my younger brother exercising some prudence with his money as soon as he started working that it hit me that there is a lot of work to be done in terms of attitudes. And this difference was primarily because my brother was told from childhood that he should be able to handle finances while I was led to believe that at different points in life it would be done for me by a man,” says Saluja.

If Jaiswal found the motivation to have a matured approach to money through her business, Saluja took cues from her brother and social media. “I started watching reels on personal finance posted on Instagram by influencers in the personal finance space and learnt how important it is to have a tab on your expenses. Like many young women of my age I would spend freely on grooming and fashion and after watching these videos on social media and with my brother’s guidance, I realised how lifestyle changes can work wonders for your finances. He showed me how a mere investment of 500 in a mutual fund can grow to in a few months instead of spending it on something unnecessary,” Saluja states.

Saluja and Jaiswal both concur that mutual fund investments emerged as the right investment avenue for them considering their struggles. Jaiswal narrates, “It was impossible initially to save a large chunk and dump it in fixed instruments because preventing leakages was the biggest challenge. SIP investments through mutual funds were convenient – I could invest every little bit of spare cash instead of having to build a corpus and I could conveniently switch between funds depending on my needs and goals.”

For Saluja, tracking the performance of her mutual fund investments helped her gain clarity on a plethora of investment-related concepts. “It was fascinating to see my money grow. Coming from a place where I had never seen or known that I could actually manage money and make it work for my goals, it was very encouraging to dabble in mutual funds by itself.”

Preet Zende, the founder of Apna Dhan Financial Services says, “Normally once our own income starts coming in, we tend to spend that freely on fulfilling our WANTs and aspirations. Because of that after some time we realize that we could hardly save and we have lost time on fulfilling our financial goals. It is not needs that put pressure on our savings but it is lifestyle expenses which hamper our savings and ultimately our investment target. The following formula can come in handy during such cases: Income- Saving = Expenses rather than Income-Expenses = Saving.”

Zende advises transferring at least 30% of your net income to an investment account. “The investment account should be a separate bank account and those funds can simply be invested in index funds, flexi cap funds, hybrid funds and liquid funds for long, mid and short term financial goals.”

Key takeaways

1. Go backwards before going forward – list down all your expenses in the last few months before drafting your first budget. This will help you in recognizing pain points and help you draft a budget that is realistic and easy to follow based on your lifestyle and needs.

2. Use your debit card instead of your credit card for the majority of your expenses. It is easy to get sucked into the “can afford later but will buy now” cycle that comes with easy access to credit.

3. Lifestyle changes can work wonders for your finances

4. SIP investments through mutual funds are convenient. You can invest every little bit of spare cash instead of having to build a corpus and conveniently switch between funds depending on needs and goals.

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.