Financial Planning for Millennial Women

As a woman, I’m tired of being bombarded with marketing messages surrounding products that are “tailor-made” for my needs, where the only innovation in doing so is slapping on a shade of pink and flowery illustrations on the product. If someone were to incentivize investing in financial products for me, going by the standard marketing formula, I should be expecting a magenta-coloured monthly SIP statement. However, it’s no surprise that women are in need of true incentives to invest and plan their finances. These could begin with increasing the pay gap, better yields to map to my financial goals, goals that are starkly different from those held by men of my age, and being able to plan for my retirement, which again looks a lot more different for my male counterparts. It is no mystery that women tend to outlive men and need to prioritize a savings blanket for themselves from the time the first income starts rolling in, yet, such a practice seems to be so foreign - it is almost shocking. Growing up in an Indian household, if a daughter’s goals are to be financed, they’re usually for her marriage and the jewelry to be used in her marriage. Furthermore, if sons also exist within the household, there is a huge difference in the way money-related conversations are had with them versus the daughters. This mindset has unfortunately trickled down from generation to lead to a huge investment gap between men and women - even among the millennial generation.

Without digressing too much into the sociological aspects of financial behavior in Indian households, here’s where millennial women can get started on evaluating their finances. At this point, I should also appeal to the men reading this article. Please don’t tune out because of the apparent target audience of this piece, specifically because you also fall well within the same target audience! You can use this information to pass on to your children, partners, colleagues, friends, and anyone else within the community. 

First things first, one needs to go through a budgeting exercise as soon as the salary comes in. As soon as the message from the Gods (read: your bank) comes in, it needs to be allocated to different spending streams. Primarily they are for fixed costs such as household and bill payments, travel and transportation costs, personal expenses and grooming costs, and finally saving for investments. But women also have several fixed costs on a monthly basis that need to be allocated on a no-questions-asked basis. These are medical supplies needed to manage menstrual health and hygiene, birth control, and regular health checkups with a gynecologist/ any other medical professional. A majority of women suffer from Polycystic Ovarian Disease (PCOD), low hemoglobin, and iron deficiencies which can multiply into many health concerns. Millennial women tend to ignore health-related expenses when it comes to budgeting and this is obviously a huge mistake. Keeping a separate monthly cash budget for healthcare, apart from medical insurance gives you an extra cushion for inescapable expenses.

Every single rupee in your salary account must be allocated to these streams, with of course a steady percentage maintained each month. Usually, there’s a 50-30-20 rule, which is 50% for fixed costs, 30% for personal expenses, and 20% for savings, but there are more aggressive savings habits also observed like a spend 60% and save 40% habit, and so on. It depends on what your monthly liabilities are and what your responsibilities look like. 

The next most important part: Planning your Financial Goals!

One of the most highly ranked financial goals among millennial women is paying for post-graduate education. Debt-free postgraduate programs are difficult to come by, and even in India, a regular MBA program or executive MBA program can set someone back by lakhs! Mid-career training and professional certification exams, to upskill themselves are also on top of this list. Again, these need to be chalked out for much in advance with the future values of these programs pre-calculated. Another alternative would be to see if employers would be willing to sponsor a certain percentage of the fee, but those are usually contractually decided and may require one to commit to an X number of years at the company. Either way, this goal must be planned for much in advance. Women can also look at loans with lower interest rates for education offered by several top banks.

Women don’t often account for breaks in their careers. Now, planned career breaks need not only be attributed to marriage or childbirth. Sometimes it can be to take a year off for writing, traveling, pursuing music, and other creative pursuits. The disparity lies here - women usually only plan a career break when it comes to only childbirth and marriage and don’t plan one for other breaks. When it comes to taking time off for childbirth, beyond a paid maternity leave, it is important to understand that there is a very critical financial planning aspect to family planning. Usually, the costs for the child are accounted for, but the mother’s living expenses, even if she wants to take a year or two off, or start her own venture from the comfort of her home, just relaxing and recalibrating her priorities while taking care of her child - there are financial implications that the woman has to bear and these things need to be planned for much in advance. 

“I want to take regular vacations.” (usually every six months): If this sounds like you, don’t worry, because it may seem like an unrealistic goal to have but according to a recent research report by Morgan Stanley, a vacation every six months has one of the most common goals among millennial women. Most of them have specified an explicit need to budget for visiting a new destination.  Moreover among women who prefer to travel solo, the costs increase since traveling solo means not compromising on transport and accommodation, looking at the safest options, keeping a large amount of cash handy, and again, being prepared for any emergency. No, I don’t mean to make women traveling alone sound like an episode of a Netflix documentary, and of course, planning for a vacation is not that complicated. But these are costs that women inherently anticipate while going on a holiday and the budgeting is measurably costlier.

Watch out for hidden costs often not accounted for: As previously mentioned, medical costs, health check-ups, and even career breaks would come under hidden costs. Some other major categories of expenditure would be fitness, skincare, and of course, apparel. Even when it comes to apparel, preferences among millennial women are shifting from fast fashion and synthetic-based clothing to organic material and timeless pieces that will last longer, which, without a doubt is much costlier than the former. 

Budgeting for businesses and finances: While several young women are employed by top companies and start-ups, many millennial women also have plans to start their own businesses. Budgeting for business capital without letting it take a major hit to savings is not rocket science. It is perfectly doable and there are several incentives for small and medium business owners to raise funds for their venture. Moreover, the digital world makes it extremely easy to get one’s story out there, so at best, with the right digital presence and networking, female entrepreneurs can definitely find it much easier to access channels of visibility and eventual fundraising. These are financial decisions that need not come at the expense of personal expenses, or major sacrifices on one’s lifestyle and overall expectations from life.

Last but not least: Seek Great Financial Advice!

Not to assume that women are the only ones in need of financial advice, but having an advisor with whom one can discuss their financial goals and retirement plans is supremely beneficial. Women in general are held back from financial conversations within families and most discount brokerages will not be able to cater to the needs and concerns of financially astute women. It is thus important to seek professional advice from non-judgmental and highly supportive advisors with whom one can easily architect their financial journey. There are tons of women today who rely on the advice of their parents, spouses, or older children and while one cannot underestimate the information passed on, there is no substitute for professional advice that takes into account a woman’s aspirations, goals, and future.