Barriers hindering financial empowerment of women; 4 key tips to overcome them

From Saina Nehwal's Olympic medals to Kiran Mazumdar Shaw's corporate success, women have made significant strides in various domains, presenting a promising picture of progress and empowerment. However, the reality is that many women in India still don’t have the freedom to choose their goals, careers, or life partners.

They don’t even have control over their income — as a survey by Tata AIA reported, 59% of working women still depend on their spouses for financial planning.

From unequal pay to gender stereotypes, many systemic barriers prevent women from achieving financial empowerment. In this article, we will explore these challenges and discuss how women can rise above these challenges.

Barriers to women’s financial empowerment

Challenge 1- Indian women are educated but unemployed:  According to a World Economic Forum report, India ranks #1 out of 146 countries in the enrolment of men & women in primary and tertiary education. However, despite a high number of educated females, female labour force participation is steadily declining - from 30% in 1990 to 19% in 2021. Some economists suggest that the rising economic prosperity has meant that women no longer need to work to support their families. Additionally, there’s a social stigma surrounding working women. Affluent families may perceive that women who work outside the home lower a family’s social status.

Challenge 2- Women who work earn less than men: Even if women join the workforce, they earn just 21% of a man’s income. There’s no denying that factors such as individual skills and the nature of work play a part in the income gap. However, the International Labour Organisation has deemed discriminatory practices such as unequal pay for similar work as one of the major drivers of the income gap.

Challenge 3- Women don’t end up in high-paying jobs: As per the LinkedIn Gender Equity report in India, only 15% of C-suite leaders are female, compared to 25% across the globe. Despite their talent, education, and experience, women are often perceived as less competent or assertive than their male counterparts, which limits their opportunities for advancement. Moreover, the belief that women are more likely to take career breaks to attend to childcare responsibilities makes them less attractive to employers looking to fill leadership roles.

Challenge 4- Rigid gender roles: Women are typically burdened with the responsibility of childcare and managing household chores. Their aspirations for professional advancement are often dismissed, particularly in times of crisis. For instance, the pandemic resulted in a higher number of women leaving the workforce to focus solely on domestic duties. According to the Center for Global Development, Indian women spent an additional 360 hours caring for children due to closure of schools during the pandemic, while men only spent an extra 30 hours.

Challenge #5- Women have less wealth than men: Since only a few women reach higher-paid positions, their savings & investments also tend to be lower. In addition, life events like child care & career breaks reduce the time spent in employment, thus affecting women’s wealth. In India, when women accumulate wealth, they end up accumulating significantly lesser wealth than men.

Reducing the gender wealth gap needs a joint effort from all stakeholders – from the women themselves, the men in their lives, and the society at large. The latter requires a reversal of stereotypes attached to a women's role in society. But the former can be tackled by educating women about investing for their financial future.

Tips for women to get started with investing

Start early to invest more: To make up for the gender pay gap and potential career breaks due to family obligations, women should aim to save and invest a higher percentage of their income than men during their working years. Women should save more to reach the same savings corpus as men, as they face unique challenges.

Identify assets: Before choosing an asset class, know its returns & risk. Map the chosen asset classes to your goals. For instance, if you start investing towards a retirement corpus at the age of 25, you may consider investing in high-risk assets such as stocks, as you have a long time horizon to mitigate the risks and potentially benefit from the higher returns.

Remember diversification & compounding: Diversify your investments across a range of asset classes, such as stocks, bonds, mutual funds, real estate, gold, etc. This helps to reduce your overall risk and potentially increase your returns. Additionally, taking advantage of the power of compounding by investing early in life can impact your wealth accumulation. 

For instance, investing Rs. 5,000 per month for 30 years with an 8% return can result in a total corpus of Rs. 70 lakhs. However, delaying your investment by 10 years would result in only Rs. 45 lakhs.

Review your portfolio regularly: As financial markets are subject to constant fluctuations, it's crucial to periodically review your portfolio to ensure it's aligned with your financial objectives. For long-term investment goals, it's recommended to review your portfolio every quarter as a regular practice.

In a nutshell, when women have control over their finances, they are better equipped to handle emergencies, plan for the future, and make sound financial decisions. This, in turn, translates to stronger families, healthier communities, and a thriving economy. By breaking down the barriers to financial empowerment for women, we can unleash the full potential of half of the world's population.

Naveen KR, smallcase Tech Manager and Senior Director at Windmill Capital