Homemaker and Financial Planning

A homemaker in my view is a Super Woman, who dedicates herself to caring and looking after her family. But, what about her financial security?  There is hardly any financial awareness amongst them. They generally do not take any active role in family finance matters.

Most homemakers perceive personal finance as complicated, tedious and a boring thing. But, they need to realize that financial education is critical to their financial well being and security. In my view, being involved in family finances should be seen as an absolute necessity. Research shows that women are more likely to outlive their spouses. Most homemakers rely on their husband's savings & investments for her financial security. A loss of a husband can be emotionally as well as financially devastating for her. She should learn to take financial decisions on her own so that she can support herself and her family when the need arises. 

10 Steps for a homemaker to live life without financial worries:

1. She should familiarize herself with the basics of personal finance as it will save her from a lot of hassles later on in life. She should educate herself about money management and investing. 

2. She should be aware of the current family financial status. What is the current net worth of the family? What are the outstanding debts? 

3. It is understandable that a homemaker may not have the income to contribute to the saving kitty, but they should ensure that they participate with their husband in family finances including goal setting and financial planning.  Believe me, setting goals together can be a wonderful exercise. 

4. She should understand the benefits and risks associated with each investment decision. Indian women tend to save money from the monthly budget for emergency situations, by understanding the benefits associated with investments, she will be able to grow her savings by investing in the right products. 

5. Since homemakers rely on a single income, they need to have contingency plans in place.  She should ensure that her husband has permanent disability insurance and life insurance (Term Insurance) to help keep the family afloat in case of any unfortunate event.  If the husband already has an insurance policy, then they need to review the same together or with the help of a financial advisor to check whether the insurance cover is adequate.  In case there is a home loan running, she should ensure that the husband buys loan insurance.

6. She should ensure that her name is included as a nominee in all investments & insurance policies. Ideally, she should be the joint holder in all the financial investment instruments. 

7. She should ensure that all financial papers, insurance papers, documents etc are stored in separate cabinet or a locker and is available readily. 

8. She should be aware of all username and passwords for all financial investments done by her husband.  As most of the websites do ask for the change of password periodically, she should set up a process to keep the same updated regularly. 

9. She should be aware of the documentation and process to be followed for the redemption or transmission of investment instruments like Provident Fund, Public Provident Fund, Mutual Funds etc. She should know the process of making an insurance claim in case of loss of a husband. 

10. She should be involved in the drafting of her husband's “Will” so that she is completely aware of its contents and also has a say in it. 

Financial security for a homemaker is an absolute necessity in today’s world. Lack of awareness on personal finance can force any homemaker to a difficult situation in future. I strongly believe that by getting involved in family finances, the homemakers will also influence her kids about money and shape her children’s financial future. 

"There are far too many people who demonize the financial services environment and cause us to fear banks, fear credit cards, and fear debt. That's just silly. I was always taught by my parents that it is better to understand and leverage the financial services system that it was to be scared of it and avoid it" - John Ulzheimer, CEO of SmartCredit.com

(Photo by August de Richelieu from Pexels)