Financial planning basics remain the same for men and women. Yet financial planning for women is in some ways different than that of men due to some particular circumstances in their life.
Women tend to take more breaks from their career than men. This could be due to child birth or taking care of the elderly. Women often give up good jobs if their spouse is relocating and it might be a while before they get a job which pays them as well. A break means a certain period without an income and this is bound to disrupt regular savings and investments. Also, it is difficult to come back after a break after a few years. This makes it very important for women to plan their finances more carefully. They need more of an emergency corpus in hand and be financially prepared so that such breaks do not throw their financial planning out of gear.
Women with the same qualifications are commonly paid less than men. The pay gap increases even more with seniority. Naturally this means lower savings and a lower retirement corpus. Even when women are not taking a break, they may choose to take up a job that pays them less so that they have a better work life balance. With less disposable income, financial planning assumes a larger importance.
Women have a longer life expectancy than men. In India the average male life expectancy is 67.4 years and the female life expectancy is 70.2 years. This means that women live longer years post retirement. So they need a bigger corpus to survive. As we have seen, women take more career breaks and have more expenses to manage. All these mean that financial planning for women is more crucial. Sometimes even working women tend to depend on their husbands to manage money and if the husband passes away earlier, they may find it difficult to manage their finances. With family support decreasing day by day, it is left to women to take care of themselves in the later years of life. Financial planning thus becomes more important for women.
Women tend to invest more in safe assets. This is changing, but women have traditionally put their money in safer assets. This is because they are risk averse when it comes to their finances and look for the safety of their capital. This could also be because women are less exposed towards financial products and there is a lack of awareness, especially if the husband is managing money matters. This puts women at a disadvantage because their wealth does not grow as fast as it should. While it is important for everyone, women should invest in equity based on their risk appetite to make their wealth grow faster