Financial freedom means different things for men and women. Here’s how.

Being aware and acknowledging the difference between what financial freedom means for men and women could help you identify your strengths and weaknesses to manage your finances better.

Financial freedom means different things for men and women. Here’s how.

Every individual is different. Hence, financial freedom is more a state of contentment and mental peace than having a quantifiable bank balance. However, there are discernible differences between how men and women perceive financial freedom and act towards it.

Societal norms and behavioural patterns significantly affect how men and women deal with money. While significant strides have been made in bridging the gender gap, there is still a lot of work to be done. We look to shed some light on how either gender deals with the financial aspects of their life.

Related: How financially aware are you? 

How do men ensure financial freedom?

Men have a better opportunity at receiving a formal education, are encouraged to take the initiative and are perceived to have stronger decision-making powers. This makes men a lot more confident when it comes to handling money. An estimated 64% of men feel confident in taking an independent investment decision.

From a patriarchal perspective, men have the onus to ‘provide’ for the family. This makes savings a priority from the early days. Men use a goal-oriented approach to saving and investing – planning for different milestones such as car, house, marriage, retirement, etc. However, as per a 2018 survey, saving for a vacation topped the list of financial goals for millennial men.

The work environment and peer group can also have a significant impact on how men approach money. Swapping hot tips on investments makes for interesting water-cooler discussions. About 70% of millennial men enjoy managing their portfolios. They are known to be proactive and will jump investments in the search for better returns. 

Men are known to be debt-heavy. They are a lot more liberal with credit cards and use debt as a means to purchase luxury items, which would be difficult to afford otherwise. Interestingly, men look to increase their disposable income to counter debt.

Men have a higher propensity to keep aside an emergency fund, plan for retirement and have both health and medical insurance. With many familial obligations to fulfill, most men fear that they will never be able to retire comfortably.

Related: Women and Money 

Why is it harder for women to achieve financial freedom?

Women are at a major disadvantage when it comes to money matters. They lack confidence in making investment decisions and doubt their financial judgement. Only 33% of Indian women feel confident in taking an independent investment decision.

Psychologically, men equate money with ‘need’, whereas women equate it with ‘independence’. This is not surprising considering women contribute only 23.3% to the Indian labour force, which implies that the majority of Indian women are dependant on a male family member.

While the women who work are able to squirrel away a much larger chunk of their income, the fact of the matter is that they earn significantly less than men. Indian women earn a staggering 19% lesser than their male counterparts. 

If a woman earns Rs 50,000 monthly and saves 12% of it, while her male co-worker with Rs 62,000 salary saves 10%, she will still end up saving Rs 200 less than him. Even though that might not look like a significant number, over a period of time, that figure will snowball, thanks to the compounding effect of investments.

Women also tend to have much shorter careers and longer life spans. They usually enter the workforce late and have breaks in their careers owing to marriage and child-rearing. The couple of years, they are away from work eats into their savings and has them lagging behind their male peers in terms of position, income and retirement savings. This makes it virtually impossible for them to catch up and save enough for a long retirement. According to a survey, an estimated 40% of working women regret not having saved enough.

When it comes to investing, women tend to be a lot more conservative in their approach. Women look to avoid products that present a risk of capital erosion. They typically tend to invest in guaranteed instruments and debt-based retirement plans. They are also more probable to seek expert help and will trust a woman advisor over a male. Only 36% of millennial women enjoy managing their own investments.

On most counts, women tend to have lesser debt than men and are far more diligent when it comes to repaying it. Women have better credit scores and will prioritise paying off debt overtaking a vacation. 

Women tend to worry a lot more about financial freedom than men even though they work just as hard, if not harder – to earn, save, make prudent investments and pay-off debt. They are still more likely to find themselves falling short when it comes to retirement savings.

Last words

This Independence Day, make a conscious effort to take the reins of your investments and savings in your hands by making prudent decisions. Invest to meet your short and long-term goals and build a comfortable corpus for your retirement. These 7 Pillars of financial planning will enable you to gain financial freedom truly. 

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