Mothers and Daughters have always shared a special bond. And last year – science proved it too! According to a study published in The Journal of Neuroscience in 2022, the relationship between mothers and daughters is the strongest of all parent-child bonds. In other words, Mothers and daughters are more likely to understand and relate to the emotions of each other than anyone else and so, a mother will exert the strongest influence of all in shaping her daughter’s personality, worldview, and attitudes.
It is quite unfortunate, then, that this bond usually does not extend to the realm of personal financial planning, which more often tends to be the father’s “domain.”
Traditionally, most women tend to hand over the management of their own as well as the family’s personal finances to their husbands post marriage; and this outdated and patriarchal approach to money management is resulting in lower levels of financial confidence in young women who are growing up watching this happen within their families.
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It is a well-known fact that women are naturally adept at managing personal finances. In fact, they are just as meticulous and detail oriented than men when it comes to money matters (if not more), and are extremely resolute when it comes to pursuing clearly defined financial goals.
Over the years, we have witnessed this first hand with hundreds of our women investors deftly sidestepping behavioural biases with a little hand holding and going on to successfully create very large corpuses for goals such as their own retirement or buying a home. And yet, multiple studies over the years have shown that as a collective, women possess lower financial self-confidence than men. Mothers can and must play an important role in reversing this trend.
A major corrective step towards empowering women and moving towards a more balanced society, would be for mothers to make a conscious effort to educate their daughters in personal finance matters. Start with budgeting – after all, who better than a mom to teach their daughter how to squeeze the last drop of value out of a rupee!
Lessons like limiting spending and not going wild with credit card spends, saving in advance for high value purchases, and putting away a fixed amount of money every month towards important financial goals will all go a long way towards helping their daughters become financially independent and confident over the years.
Another important lesson that mothers can teach their daughters is to self-educate on important investing concepts such as risk/reward, compoundingrupee cost averaging and inflation so that they can become successful investors themselves.
Mothers could lead by example by setting up their own financial plans and working with a qualified financial planner to invest for these important financial goals. They could involve their daughters first hand in the financial planning process to teach them the value of disciplined investing and measured risk taking.
Now, to address the elephant in the room – it is a fact that sometimes, marriages do not work out. It is also a fact that court-ordered alimony payments often end up being woefully inadequate for mothers to be able to set up a secure future for their daughters. Through the gift of financial planning, the impact of such unfortunate situations can be cushioned.
Working mothers can safeguard their daughter’s future by investing independently for them from their own incomes. By leveraging the power of SIP step ups, one can create a large fund for their daughter’s future that can prove to be useful for them when they are finding their feet and settling down in life.
Even by starting off with a SIP of Rs. 5,000 per month when your daughter is born and stepping it up by Rs. 2,500 per month on a yearly basis, it is possible to accumulate a sizable corpus of more than Rs. 1.5 Crores for your daughter’s future by the time she is an adult, if you choose aggressive equity funds and follow correct investing practices.
Patriarchal societies thrive on the fact that legacy is considered the prerogative of men. What if women started saving small amounts to create their own financial legacies, especially to pass on to their daughters? We truly believe it would lead to a major structural change in the way society functions today.
In conclusion, we would like to state that the active participation of mothers in the financial planning process can go a long way in securing their daughter’s future as well as their bond together. After all, there is nobody better to instil fantastic money values in a woman than her own mother.
The biggest changes in life start with small steps. The key is to start. Financial empowerment can be compounded, just like investments can.
-The author is CEO, FinEdge. Views expressed are personal.
Disclaimer:The views expressed in this article are those of the author and do not represent the stand of this publication.