Empowering the matriarchs: How women take the lead in joint financial decision-making

Financial decision-making is an integral part of any household, and it is interesting to see how different families approach it. In this article, we explore the financial dynamics of five diverse families from India and how women are empowering themselves in shaping their financial futures. Let's dive into their stories and understand how they are managing their finances.

The Varma Duo - Diverse investment styles

Meet the Varma couple, Rahul and Neha contribute equally to monthly expenses, meticulously tracking everything from groceries to leisure activities. However, their investment strategies diverge significantly.

Rahul, a dynamic and risk-taking investor, allocates his funds across various avenues like cryptocurrencies, mutual funds (MFs), and National Pension Scheme (NPS). He prioritises saving beyond tax requirements.

On the other hand, Neha adopts a conservative approach to investing. She prefers passive Exchange-Traded Funds (ETFs), a couple of Equity-Linked Savings Schemes (ELSS), and NPS contributions. Her focus is on stable growth and wealth preservation.

Despite their differing investment styles, they share equal responsibility for the home loan. However, the question of how the loan would be managed in case of unforeseen circumstances looms over them.

Ira and Kabir's financial journey

Meet Ira and Kabir, a young couple navigating the complexities of modern finance. Ira, with her extensive experience in ‘Fintech’ and financial markets, takes the lead in managing household savings and investments. On the other hand, Kabir admits to having minimal knowledge about investing and financial planning.

For Kabir, investments often revolve around tax-saving instruments and traditional avenues like fixed deposits (FD) or recurring deposits (RD). However, when it comes to making investment decisions, Kabir trusts Ira's expertise implicitly. He actively involves her in discussions and seeks her guidance before making any financial commitments.

Interestingly, Ira's influence extends beyond her immediate family. During her wedding, instead of opting for traditional gold ornaments, Ira convinced her in-laws and parents to invest in sovereign gold bonds. Despite initial scepticism, the growing value of these bonds has not only proved her foresight but has also encouraged her family members to explore more investment opportunities.

The seniors' financial arrangement

The senior couple, Mr. and Mrs. Apte, have a unique financial setup. Mr. Apte, a businessman, entrusts all earnings to his wife. She meticulously manages household expenses, investments, and savings, ensuring financial stability for their young son's education - who was born much later in their lives.

Mr. Apte takes a portion of the income for personal expenses before handing over the rest to his wife. Their son's education and other expenses are funded through careful savings accumulated over the years by Mrs. Apte's prudent financial management.

The Malhotras' financial dynamics

Mr. Malhotra managed household expenses and investments during their working years, a shift occurred post-retirement. Both daughters now contribute to household expenses, allowing the family to utilise savings and investments for emergencies and medical needs.

Of particular note is Isha, the younger daughter, who embarked on her financial journey at a tender age. Starting with a modest SIP of Rs. 500 monthly from her pocket money at 19, Isha witnessed firsthand the power of disciplined investing. As her investments grew, so did her interest and confidence in managing her finances.

The Shankar - A joint affair

Ravi Shankar, a retired patriarch, brings a legacy of prudence in savings from his days as the family's primary breadwinner. His foresight ensures a comfortable provision for essentials like medications and incidental expenses. Meanwhile, Arjun shoulders the mantle of the current breadwinner. With his wife Priya's consultancy earnings, they orchestrate a harmonious balance in managing their household expenses and ad hoc needs. Arjun oversees the children's education and larger household expenditures.

Arjun and Priya's financial independence extends to their investment decisions, where they pursue separate paths without a comprehensive understanding of each other's financial portfolios. Such disconnected financial management may lead to inefficiencies, missed opportunities for collaborative financial planning, and potential risks in the event of unforeseen circumstances.

Why joint financial decisions matter: Insights from a CA

According to an experienced Chartered Accountant, Mr. Rakesh Rathod, collaboration and transparency in financial matters are crucial and go beyond just transactions. These values embrace empathy, and foresight, and contribute to long-term financial well-being.

Picture this: a husband, driven by the desire to impress, delves into extensive loans for luxury purchases without consulting his wife. However, a simple conversation could have revealed her contentment with their current lifestyle, avoiding unnecessary financial strain.

In a joint family setup, consider a scenario where breadwinners are struggling to save for unforeseen emergencies. By discussing these concerns openly, the family can collectively strategize financial solutions or even ration unnecessary expenditures thereby mitigating the financial burden on sole breadwinners.

The aftermath of a spouse or breadwinner's demise underscores the criticality of informed financial decisions. Without a shared understanding of loans or financial commitments, surviving family members may face unexpected burdens, jeopardising their financial stability. Joint financial decisions empower families to navigate uncertainties and foster inclusive financial practices, embodying the essence of holistic financial well-being.

Empowering narratives, empowering futures

Women play diverse roles in shaping financial narratives within households, from proactive management to less involvement. Encouraging all women to participate actively in financial decisions ensures an empowered financial landscape. Joint financial decisions empower everyone in the household to navigate financial challenges seamlessly, ensuring financial security and continuity in case of unforeseen events.

Disclaimer: All scenarios, mentioned in this article, are hypothetical and for educational purposes. No investment solicitation or recommendation.

Naveen KR, smallcase Manager and Senior Director at Windmill Capital