Who carries more risk? Men or women?

Women face a multitude of risks at each life stage. Let us understand the more common scenarios, the inherent risks they carry and in light of that what all women must do to mitigate the underlying risk.

Financial dependence

This is an interesting risk. Who takes most of the financial decisions? Dependency does not literally imply being dependent for money. It is about knowing where your money is being deployed. It is about involvement and playing a role in deciding where the money must be deployed. I have in many instances noticed that women have a sixth sense about money that men don't. Taking the effort to understand and find out details such as those listed below will help you mitigate this risk and gain financial independence in the true sense:

• Know what you have
• What your husband has
• How much insurance your husband has
• What debts you have,
• How many bank accounts you have together
• The value of the ornaments you have,
• Contents of your bank lockers

Lower share of assets

Who owns how much? Do you have assets at least equal to the money you contribute to the household? Surely, you must spend on apparel and accessories but you must also have an equal share in investments as well as white goods.

In many instances I see scenarios where, if the husband's account runs out of money towards the end of the financial year, money is transferred from the wife's bank account to husband's account for his tax planning. The money is not returned. This creates an asset imbalance. A good cash flow and budgeting exercise would easily solve this issue. Come a rainy day and there are far lesser assets in the name of the wife.

Failure of marriage

This is a critical risk. Point 2 above will make far more sense given this scenario. The situation is even more complicated if there is a child/children involved. Assets play a major role in dictating financial strength especially when there are questions relating to the custody of child.

Failure of marriage is more common today than it was say 20 years ago. In this scenario the questions such as, "How much do you really own?" become very important. This is such a strong change that your world can come shattering down if you do not have access to any money.

However, if such an unfortunate event were to ever happen, please note you must have complete and unrestricted access to at least Rs 200,000 to 300,000 even more if you have a child. This money need not be sitting idle in a bank but can be invested in such a manner that;

• The cash is available on a moment's notice,
• There are no penalties attached,
• There are no blockages of joint ownership i.e. you have unrestricted access.
• Such a backup will let you hold up your head high during those turbulent times.

Unequal division of inheritance

This tends to be a fall out of the Indian culture and value system. For most parents, daughter's marriage is a far more expensive affair than a son's marriage. However, when it comes to asset distribution, the family house unquestionably goes to the son and his family.

What happens in case of a divorc� and there is no real estate in your name, not much is available from alimony, it is also not possible to live with parents or brother/s and their families? Every woman, especially married must have a piece of real estate in her name. Owning a real estate provides tremendous mental security, those of you who own a real estate will agree.

Generally speaking I believe that daughters should speak to parents, insist on a reduction on marriage cost and instead invest that money into aggressive wealth generating instruments and subsequently real estate.

The risk of failure of marriage is higher in early years, realisation of imbalance of asset happens at a much later stage in life where it is too late to restructure anything within any family (own or in-laws).

Hence the strategy should move on a scale of very aggressive to conservative assets as times passes by, but at all times the money must be always deployed towards wealth generating assets.

Before parents and women start considering planning for marriage consider consulting a couple of financial experts to plan contingencies. In subsequent articles we will explore financial strategies that women may use given their life stage.

The author, Kartik Jhaveri, is an expert at Financial Planning. He is a Certified Financial Planner and a Chartered Wealth Manager. He may be reached at kartik@transcend-india.com.

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