Investment options for Housewives
Written on Friday, March 4, 2016
By Mr. Anil Chopra - Group CEO & Director, Bajaj Capital Ltd.
Housewives have a very critical role to play in every family because they control the budget and they can set the culture whether it is saving culture or spending culture. In Indian society where saving for a rainy day is considered very important, housewives can play a very important role by following austerity and by remaining within the budget and by saving something out of the monthly allocation which they get from their husbands. They can do smart planning within their budget, whether it is kitchen Budget, household budget or shopping/entertainment budget. And, also, it is seen that in most families the working spouse is the one who take most of the financial decisions, but times are changing now and housewives also need to play very active role in ensuring that proper planning is being done to take care of the short and long-term goals of all family members.
Now what has been seen in Indian society is that most housewives who do not have a proper educational background will go on hoarding money, saved out of their budget either spending it recklessly or just may be accumulating physical Gold, which is not very healthy and it’s time that housewives should be educated through Radio or through magazines or through some seminars about the constructive role which they can play in building robust financial planning system for their family which will take good care of their immediate and future goals. Also, it has been seen that some housewives indulge into monthly committee or monthly kitty system, where they are able to save Rs.5000/- to Rs.25,000/- every month. Depending upon husband’s income or family over all income and they end-up accumulating that through unstructured ways and end up with buying some irrelevant or not required items like, gold, personal consumable things, etc. Also, there have been instances of losing the entire savings if Committee organizer goes absconding.
The Right Approach:
Housewives should consider investing their savings in Systematic Investment Plan (SIPs) with a long term horizon which can actually create wealth in addition to necessary tax saving which her husband must be doing already. Whatever budget is in the hands of the Housewives, if they are able to save some part of it rather than consuming it or spending it on irrelevant things or buying physical Gold every now and then and if they can put it into some long-term schemes then, family future can be brightened and lifestyle can be improved considerably, the children can be provided much better higher education and the retirement can be much more comfortable and over-all status of the family can be improved. So, it is important that the basic fundamental principles of financial planning are understood by every housewife.
The First Step:
To begin with, housewives need to take complete interest in the financial matters by discussing with husband, understanding whether all the needs have been taken care of or not. Starting from first buying a Health Insurance Plan or Family Floater Plan, where by paying Rs.15,000/- to Rs.20,000/- p.a. premium, reasonable
sum insured can be taken for unforeseen medical expenses, which may come to any member, whether young children or housewife herself or husband or the dependent parents. If the proper Health Insurance Plan is not there and any illness comes into the family, all the saving which housewife has made, hidden from husband etc. will be lost by just one stroke of medical illness.
Similarly, housewives have to ensure, in consultation with their husbands, that there is enough protection on the family in case of the unfortunate event happening, so there has to be an adequate Life Insurance cover, which can be taken in the shape of term plan, which are low premium and high protection schemes.
Generally, it is said that the 7 times of the household annual income should be the sum assured. So, if the husband’s income is Rs.15 lacs in a year, the housewife must ensure that Life Insurance of at least Rs.1 crore should be there. In case of any unfortunate event, the family status is not disturbed and the children education and other goals are accomplished without any hindrance. Even if she has a special liking for physical Gold, she should consider other options like, going for a gold ETF or going for SIP in a Gold fund to get the benefits of the appreciation in the Gold Prices but, without the risk of keeping physical Gold at home or in locker.
Some housewives while pass away their time in playing cards or going to kitty parties etc. which is complete waste of time (which can be utilized for ) if the same amount of time is spent on doing some quality research on internet and taking some financial decisions, can help them improve the family over all well-being, that is something which housewives should consider.
Also, it has been noticed that just to kill time some housewives have started indulging in reckless day trading on the internet. Certain percentage of housewives are getting into this habit of buying and selling shares sitting in front of the computer, which is completely avoidable because not only it is a waste of time but also it is a wastage of husband’s earning or important savings, which can be used in a systematic manner for long-term wealth creation. So, money should be put to good use rather than being speculated.
Bank Savvy :
First of all, every housewife must be finance savvy and she must have a Bank account and cheque book. She must learn how to operate the Bank Account, so that, whatever savings she makes from monthly budget, same can be deposited in the Bank Account rather than spending or hoarding in house and then through cheque book the same can be invested systematically in different good schemes that can help building a good portfolio.
When we talk about housewives, we not only discuss about middle class housewives but also housewives of very rich industrialists or high earning MNC employees. So, some of them may get access to Rs1-2 lakh a month or even higher budget to spend on household needs. So, if they do it very intelligently and smartly they can always carve out good amount and they can create a separate line of income or separate portfolio which can be very handy for the future goals of the family.