TomorrowMakers

There’s no doubting that homemakers are great at a lot of things. So, why aren’t they great at handling finances, too?

Why do homemakers lag behind when it comes to finances?
 
The Pallavi Joshi-starrer ‘Pressure Cooker’, shortlisted for the Jio Filmfare Awards 2018 in the short film category, has the veteran actress play a homemaker, ‘Swati’, married to a man of many quirks, one being his reluctance to give her cash.
 
When she asks for some money to buy a new pressure cooker, he tells her she doesn’t appreciate its value, and that he would repair the faulty cooker later. And when she takes it to mend it in his absence – for Rs 50 – the man complains he could have done for less. The movie ends with her responding to her husband’s comment with a smile.
 
On one level, ‘Pressure Cooker’ portrays the familiarity of domestic monotony; on another, it enacts, through its story-telling, an age-old perception; the perception that women are incapable of handling cash.
This is so, even when homemakers make few day-to-day decisions, like repairing the cooker for only Rs 50; they are only scoffed at.
 
Challenges: Stereotyping, Low Confidence
 
According to investment advisor Dhirendra Kumar, this perception – that men are the savers, women the spenders – is “incredibly widespread” and is not merely characteristic of homemakers from a conservative, traditional background.
 
In support of his contention, Kumar refers to television commercials, which depict women as smart and wise only when it comes to products such as consumer durables and food brands. But when it comes to financial products, it is the husband that is “wise and foresightful”.
 
This stereotyping is so ingrained in society that it conditions women, especially homemakers, to lose faith in their ability to handle money. In a signed article, Kumar says while men write to seek financial guidance either for themselves or their spouses, such queries are very few from women. “It seems that investment is something that women just don't do. In families, it's the men who manage savings and investments.”
 
A 2013 poll by DSP BlackRock involving some 4,750 working women in 14 Indian cities found that a remarkable 77% of respondents said they depended on their husbands or parents to take a call on any decision relating to investments on their behalf. If this is the case with working women, one can very well imagine the number of homemakers in India who are dependent on male relatives and friends.
 
Interestingly, this is not a challenge confined only to conservative India; a 2013 poll in US showed that an overwhelming 66% of American women say they preferred to have their partners/spouses look after them, financially.
 
Explaining why this is so in a developed country like the US, Nancy Coutu, an Illinois-based financial planner says, women have “all kinds of issues” to think about such as – taking time out from their professions to look after children, gender pay gaps and even a ‘father knows best’ mindset that makes men more suited for financial matters. Men, on the other hand, usually don’t lose sweat over these, and this explained why women are more cautious when it comes to investments.
 
Security for Homemakers: Insurance
 
That is the thing: this ‘father knows best’, or rather, ‘men know best’ approach tends to overlook the need for financial security for homemakers. For instance, any suggestion about life insurance for them is met with disbelief: ‘Why on earth would she need life insurance?’
 
This argument goes thus: by definition, life insurance is a cover for the loss of income following the death of an/the earning member of a family, whereby compensation is paid to the bereaved beneficiaries in a lump sum, which is called the ‘sum assured’. The idea is that some regular income may be generated from this sum assured amount to meet living expenses.
 
However, the argument goes, if the policyholder – the homemaker – does not hold a job that guarantees a regular income, where is the loss of income; in that case, what is being attempted to be insured?
 
The argument holds water – as far as income is concerned. But it also presupposes that a homemaker’s job – of raising kids and overseeing the day-to-day running of a family is not work, as there is no regular salary attached to it.
 
However, it ignores the reality that if the homemaker dies, the work she used to do for free – as it is her family – still needs to be done in her absence. Children still need to be raised, maybe tutored daily, food must be cooked, clothes laundered, elderly members of the family looked after etc.
 
The question is: who does all this now? A cook will have to be hired, maybe a nanny too, a nurse for the aged – all of which entail extra expense. If the homemaker had a life insurance policy, the sum assured would have accounted for this additional cost.
 
Fortunately, an increasing number of men are taking out life insurance policies for their homemaker wives, primarily because a few life insurance companies have introduced policies specifically for women that are designed to take care of their financial needs at different stages of life. These make no distinction between a working spouse and a stay-at-home spouse.
 
Additionally, it is a good idea to shop around for a suitable health cover, though health insurance companies are often wary of selling to women because they are more prone to fall ill.
 
Salary for Homemakers?
 
The debate over whether homemakers should buy life cover for themselves, in turn, raises another question: should homemakers be paid to do their job, instead of taking for granted what they do? In fact, there is a debate on the subject, with former Women and Child Development Minister Krishna Tirath suggesting that husbands pay their wives for looking after the house.
 
Why do homemakers lag behind when it comes to finances?

 

 
Sometime back, The Economic Times noted that many economists also believe that the household work done by homemakers contributed to the GDP and should be seen as an economic activity and decided to calculate the monthly monetary worth of a homemaker’s unpaid work. Its conclusion: the work is worth Rs 45,000.
 
But who pays the homemaker her ‘salary’? The husband, as the former minister had suggested? There may be an inherent flaw in the proposal: there are likely millions of married men, who have a decent job, but who may not be in a financial position to pay someone – his wife – an additional Rs 45,000 while bearing the family’s monthly expenses.
 
However, given that experts have accepted that homemakers contribute to the economy, perhaps the government can pay a minimum legal wage to homemakers? Also, the current tax laws could also be tweaked to make tax-free money gifts to spouses more attractive; if that can be done, then more money will be gifted to homemakers – perhaps as salaries. It indeed is an area that can be looked at afresh.
 
Why do homemakers lag behind when it comes to finances?
 
The woman who handles the household budget smartly, somehow finds its difficult to translate this confidence into making investment decisions.  One major reason is her guilt with respect to not earning an income and second is her lack of awareness about basics of banking, insurance and investments. The first issue could very well be solved while solving the second issue.
 
When this woman educates herself about the basics of her finances, she'll know how to generate an income by investing her savings. Hence, the key to enabling homemakers to look after their finances is encouraging, supporting and empowering them. That would surely make millions of ‘Swatis’ across India financially independent on a personal level.