Financial literacy is a bridge, women need to cross to empower themselves in the present-day society. In India women and financial independence have long been a discussion with very little progress. As we try to push that conversation further, it’s worth reminding ourselves that what holds us back is lack of understanding of money matters and its concepts.
Financial literacy is the cognitive understanding of financial components and skills such as budgeting, borrowing, investing, taxation
- Budgeting: In layman’s terms, budgeting is the practice of planning your income and expenditures. By making realistic budgets and segregating income and expenditures, one can be financially secure.
- Investing: This financial practice is a trend that has gained a lot of traction in the recent past, in the general public. There are plenty of areas to invest in interest rates, risk mitigation, bonds, etc. Well-calculated investments can induce an additional source of income.
- Borrowing: Most people in the world do come to a point where they need to borrow money for some of the other purposes. It is very essential to have enough information about interest rates, time value money, and loan structures in the market.
- Taxation: Different kinds of incomes are taxed differently. Hence, it is very important to see what part of your income goes away and the impact of these taxes on an individual’s net income.
Also Read: Why do women need to have conversations about money and finance?
Why should women, specifically, be financially literate?
In a world that is struggling to bridge pay gaps women play an essential role in the flow of finances and assets. Most women today, juggle between managing their household responsibilities, their professional commitment, and upholding a social life. Mayra Rodriguez, in a Forbes article said that “Even thinking about personal finances makes over 50% of American adults anxious.”
Research suggests that women, on average, spend 12 years lesser in the workforce as compared to their male counterparts. This also means that their life savings are considerably lesser than the average male population. It is also known to us that on average, males live to up about 76 years of age, while women on average live up to and beyond 81 years of age. Retirement planning is an essential part for women. It is seen that 70% of women require assisted care in these years; which in turn also makes the rising healthcare costs another area to plan for. Planning for their old age empowers them to manage and bolster their life during unforeseen circumstances.
When it comes to the gender gap in pay scales, the most prominent driving factor is lower knowledge and lack of confidence.
“Having a comprehensive understanding of one’s economic situation is critical for future decision-making and overall well-being,” said Donna Rubin, Assistant Vice President for Student Wellness at RIT. Financial literacy among women is a step forward to social equality and decreasing the gender pay gap. It will facilitate informed and profitable financial decisions towards their life goals. Financially educated women will support and motivate other women in society which will eventually lead to economic growth on a global level, as more and more females join this movement.
Research also shows that children are influenced by their mothers more than their fathers. Hence, it becomes a cornerstone in a child’s upbringing also on how they are told to be responsible and critical with finances.
Sources for Financial literacy
- Annuity: Annuity is an organization that equips the audience with well-researched information about the marketplace and its functioning within the economy.
- Investopedia: It is a quick pit stop to all your economic and financial queries.
- Khan Academy: Sources on Khan Academy brings together sources for personal finance, addressing topics from taxes, accounting and financial statements, investment vehicles, etc.
- MyMoney.Gov: It teaches people to start from scratch with healthy and ethical financial practices Spending, Earning, Saving & Investing, Protecting and Borrowing.
As SheThePeople founder always says, it’s not “enough to have money but have your own money because it gives women the agency to say no to difficult situations.”. That’s a big reason why women must strive towards financial independence. Perhaps we should start at the basics and build our way up.