Empowering women for their financial independence

Empowering women for their financial independence

Empowering women for their financial independence
Financial literacy is an important life lesson that often goes unaddressed, or is taught very late in life and finds no mention in formal education.

More specifically, women often get the short end of the stick when it comes to being included in financial decision making, long-term planning and prioritisation of finances.

This was validated by a survey conducted by Gallup (an American research-based, global performance-management consulting company) in 2014, which revealed that nearly 80% of women in India are not financially literate.

Maximum responsibility thus, falls on the parents to ensure that concepts such as need, necessity, desires, and abundance are taught very early in life in a way that the child understands and can naturally apply at a more mature stage when they are planning their own finances. It is therefore, never too early to talk about money with your daughter.

As we celebrate women and their spirit this month, it is even more pertinent to talk about financial planning and independence, and the right time to start talking about money.

Here are four key aspects of money management that you can teach your child at a very early age that will help them become financially independent adults.

Responsibility through pocket money:

A great way to make your child understand the value of money is by making them responsible for some of it. Give your child a small sum of money on a weekly or monthly basis and give them the freedom to buy one or two toys or treats with that money.

Inculcating this habit early on will not only enable your children with the ability to prioritise their desires but will also teach them that they can spend in limits and only for a few desires.

 Teach them to save: By giving her small sums as pocket money you can teach her to save a larger amount for a toy they might really want.

For example, if she asks you for a toy that costs Rs 500, teach them that if they save all or some portion of their pocket money they will, eventually, be able to buy it at a particular time, on their own.

Apart from inculcating the habit of saving, the child will also learn that not all desires can be instantly gratified and that patience is an important virtue to fulfill needs.

Teach the concept of investing:

When you give her money that she is responsible for spending or saving, you can also teach her about how the money can grow if they invest it.

For example, give them a small ‘box’ where they can keep the money they want to ‘grow’.

Tell her that if she is able to save a sum of Rs 50 and keep it in the box for a period of 30 or 60 days, you as a parent will add Rs 5 or Rs 10 i.e. 10-20% at the end of the period.

This will teach her that saving money over longer periods of time can earn returns.

 Giving is equally important: Teach your children that it is equally important to donate a part of the savings for someone else’s needs.

Along with the box they manage for savings and investments, they can keep a section for donation. Include them in such activities and encourage them to donate so that they not only learn to share and give but also develop good habits early in life.

Understanding money and how one can interact with it early in life is important because when you are entrusted with much larger sums, making the right decisions is critical.

These are simple ways to make a child as young as four or five-years-old understand how they can manage their pocket money.

Your daughter is likely to pick up the habit of saving once she starts earning. Being exposed to the culture of earning returns at an early age, will help her take the next step forward — investing.

(The writer is CEO and co-founder at Scripbox)