Wealth through wisdom – why women need financial wellness

Wealth through wisdom – why women need financial wellness

by Natalie Dau 4 weeks ago

When one thinks of the word “wellness”, it usually involves something health-related. Stress, fitness and quality of life are without a doubt veritable concerns when it comes to leading a well-balanced lifestyle, but when was the last time you took more than a minute to ponder about the future of your finances? Saijal Patel knows the importance of this all too well. Formerly a financial strategist and analyst, Saijal discovered that many of the financial needs pertaining to women were not being adequately addressed by the industry, leading her to start Saij Elle, an organisation with the aim of empowering women and helping them achieve financial liberation. We took some time to ask her some much-needed questions about how women relate to the concept of financial wellness.

 

 

1. How has financial wellness for women changed over the years?

Women have made incredible strides both personally and professionally. In Asia, women now account for one-third of the wealth ($2.9 trillion) and it’s rising quickly as more women enter the work-force and inherit money from their parents and grandparents.  Sadly though, their approach to managing their money hasn’t kept pace which puts women at financial risk.

 

For example, majority of women continue to delegate their finances to their spouse/partner or to other family members. In Singapore, only 29% of women are the decision makers of their own retirement plan compared to 43% of men, and 19% of women rely on family members to plan for them (YouGov/Saij Elle survey). I always tell this to women:  You’re ultimately responsible for achieving your life dreams and how you want to use your money to reach them. We women are fighting for equality every day, so why hand over your financial security and life goals to someone else? At the very least, get involved and have a say in how the money is handled. We women have access to more much information today than ever before thanks to the Internet. There are no excuses not to learn and be financially empowered.

 

2. What is the most neglected/overlooked aspect of financial security?

Many women (and men for that matter) equate financial security to a pile of cash in the bank. They think this is a safer option than investing money in a well-diversified portfolio. 

 

It’s a false sense of security and here’s why: Women on average make 24% less in wages than men, and their lifespan is longer than men’s. This means that they have to make do with less while making sure that it lasts longer.

 

The above is why women have an 80% greater chance than men of living in poverty at retirement. It is also why for every 10% a man puts away for his retirement, a woman has to put away 18% to have the same amount of savings. Women have to be smarter with their money, and one of the most effective ways to build wealth is to invest. 

 

As you know cash in the bank earns very little interest and in fact the value of that money erodes each year because of inflation. By building a balanced portfolio and taking on a bit of risk (doesn’t have to be excessive) it’s reasonable to earn a 5-7% return on average annually and with the power of compounding, they can accumulate a sizable amount of wealth by the time they retire.

 

3. While retirement is certainly a major part of financial planning, what other milestones in life should people keep in mind when managing their finances, regardless of lifestyle or marital status?

Life is a journey and that journey affects our income and our expenses in different ways at different stages. We need to be aware of these and plan for them, because these all ultimately affect how enjoyable our retirement will be.

 

When people start their career, they are striving to establish themselves and work for that promotion and higher pay.  At the same time, they may be planning to buy their first home, or travelling despite not having a lot of disposable income. These still require putting some money aside and an action plan.  I use this analogy: When we want to lose 5kgs, we put a plan in place –  what we need to eat, how often we’ll exercise, what type of exercise we’ll do. Planning for our life goals should be no different.

 

Everyone needs to think about life and health insurance to protect oneself and their family. Then there’s estate planning (everyone should have a will, so they have a say in how they want their estate distributed) Taking on a big mortgage for a home requires a debt management plan. 

 

All these things matter while at the same time planning diligently for a retirement that is 20-40 years away.  It can seem overwhelming, but it needn’t be. It’s why I built a financial planning checklist that people get for free as part of my 5-day financial boot camp!

 

4. What has contributed to the disparity between how men and women view/treat money?

I scratch my head at this one. What I know is that men and women have had the same education or rather the lack of financial literacy education so it’s hard to understand why women shy away from managing their finances more than men. I believe our society and cultural expectations play a big role. Women are traditionally seen as the home caretakers and so they default into managing the household finances and leave investing and retirement planning to their partner or others.

 

Many other women are juggling work, home, and taking care of children so with limited time, they hand over the financial management to their partner. It comes down to exposure and whether or not they are being “forced” to learn about finances out of necessity.

 

One thing is for certain - women and men view money differently – just as how they approach work and relationships differently. It’s like that saying, “men are from Mars, women are from Venus”; same thing applies to finances.

 

Men often think in silos when they are approaching money. They look at investments and tend to focus solely on investment returns. Women take a more holistic, protective approach towards money. They want to know how such things as investment products and life insurance fit into their life goals and how they can protect them from downside risk.

 

There’s a debate as to whether women are more risk-averse. They tend to be more cautious compared to men yes, but when they understand the pros and cons, they will take risk. They want to be educated first and don’t blindly jump in whereas men do!

 

5. How would gender equality/equal representation within the workplace affect the current level of engagement women have with financial planning?

I believe that as more women are being empowered in the workplace and in their career, this empowerment manifests in different areas of their life including financial management.

 

I say this with caution however -  because although one has the money and the means doesn’t mean they necessarily take action. I know many men and women, some in senior positions who don’t plan their finances. Financial success as less to do with education or money (20%) and much more to do with mindset (80%). Personal finance takes a different skillset but with education about its importance, and providing the tools, all people can be empowered to manage their money better.

 

6. What kind of improvements would you like to see in the financial industry, pertaining to services rendered?

Sadly, the financial industry is far behind when it comes to servicing women and understanding their needs. Having been in what is a very male-dominated financial industry for 20 years, I’ve witnessed this first-hand. Only 2% of wealth managers even consider women as a different client segment and adapt their services accordingly! It’s shocking, and we wonder why women are hesitant to engage with the financial industry that doesn’t get them. 

 

This is why I created Saij Elle. Not only do I educate women through my website, workshops and coaching sessions on basic financial planning and investing principles, but I also teach them what questions to ask so they get the service and solutions that make the most sense for them. That’s actually the bigger roadblock for most people.

 

I also provide consulting and training to Financial Services companies to help them better engage with women. In essence, I see myself is a bridge between the two.

 

The financial industry is slowly waking up to the need to service women, but I truly believe that it will take women speaking up about their needs to see real lasting change. So, encourage all women to break this money silence!

 

7. Why do you suppose that women feel embarrassed to talk about financial matters?

We’re of a society that judges people by how much money they have or don’t have so overall most people will not be as open talking about their personal situation – even though having been helping hundreds of people I can tell you there’s much more below the surface as opposed to what people see.

 

There’s an added unconscious bias that women face, in that If they speak about money, it’s seen as crass or distasteful. This doesn’t seem to apply the same way to men.

 

Many women confess to me that they’re embarrassed that they don’t know more about personal finance. So, they end up brushing it under the table. I will tell anyone, especially women that by not doing so, their financial future is at stake. More importantly, they are in fact part of the 90% majority.  This is not a men VS women problem, rich VS poor problem, or educated VS uneducated problem – many people struggle with their personal finances. It’s not innate and we were not taught this in schools. If you were lucky enough that your parents imparted some knowledge to you or that you studied it like I did, then you’re in the minority.  I give my clients encouragement and let them know they are not alone, but I also give them “tough love”. The days of putting your financial security in the hands of someone else has to stop now.

 

Most will agree that wealth can be fickle thing. The future is filled with uncertainties that disrupt even the most well-laid of plans. Still, it is far better to HAVE a plan in place as opposed to dwelling in the absence of one. For women everywhere, this need is even more imperative. Regardless if you’re single, married or with children, a fresh graduate or a seasoned professional, knowing that your financial future is secure and in your hands confers an undeniable level of comfort and confidence that is hard-won, even by today’s standards. Keep the odds in your favour, even when the world tries to stack them against you!

 

For those in Singapore who are keen on finding out more about how to better manage their investments, Saij Elle will be running workshops this September. Do follow them to stay updated!