In a new book, a financial planner offers ten ways for women need to be financially literate

Financial literacy encompasses the knowledge and skills required to manage personal finances effectively. It involves understanding various financial concepts, such as budgeting, saving, investing, debt management, insurance and retirement planning.

Financial literacy empowers individuals to make informed decisions about their money and achieve financial stability and independence.

I firmly believe this: “Financial literacy is financial self-defence”.

Financial self-defence involves being aware, informed and alert, ensuring you’re not vulnerable in unforeseen situations. It means being ready to face all the lemons that life throws at you so that you can handle every situation as and when it appears.

And this can be achieved by not just being literate but…financially literate.

Once you are financially literate, the next step is to be financially smart by applying the knowledge that you have gained, which means having the ability to not let money – or the lack of it – get in the way of your happiness, so that you can make smart and informed life choices. It is being well-equipped with the required knowledge and the tools that are needed to make smart financial decisions.

Ladies, when it comes to your finances, never hesitate to ask questions. Understanding is key to making informed decisions. One of my clients, a gynaecologist, once shared a frustrating experience. During meetings with bank relationship managers, terms like PMS were casually thrown around. For her, PMS meant Pre-Menstrual Syndrome, not Portfolio Management Services. The RM assumed she was familiar with financial jargon, often directing the conversation towards her husband and alienating her, despite her being the one interested in investing. This situation isn’t uncommon. Many financial advisors use terms like YTM, PMS and IRR, which can be daunting if you’re not from a finance background. It’s okay to ask for clarification. Your financial future matters and being informed empowers you to take charge. Don’t let unfamiliar terms or assumptions hold you back. Ask questions, seek clarity and build your financial confidence. Together, let’s bridge the knowledge gap and empower ourselves in the world of finance.

She shut off and deferred her decision to invest, feeling alienated by the financial jargon and assumptions made during those meetings. In the end, who really lost out? We got introduced after two years, and she confided in me about her experience. She had deferred investing her money then, feeling put off by the previous advisor’s approach. It was only after she felt heard and understood that she chose to invest. This incident made me reflect deeply. The previous advisor should have recognised her discomfort and clarified terms, fostering a trusting relationship. Instead, assumptions and miscommunication led to missed opportunities. In the end, it was both the advisor and the client who lost out on potential gains. Effective communication and understanding are crucial in financial advising, ensuring clients feel respected and empowered in their financial decisions.

Financial literacy is indispensable for all individuals, irrespective of gender. Yet, its importance needs to be especially emphasised for women, who are more easily influenced by diverse societal and economic dynamics. Taking ownership of your life empowers you to better support your loved ones.

My earnest request to you is this: Prioritise for yourself as you do for others. Remember, self-investment isn’t selfish; it’s essential for holistic well-being.

You don’t need to be “exceptional with numbers” or an expert with complex calculations to master your money. You just need to be aware and alert and develop some good healthy habits and have the right attitude to be financially smart. Yes, you have it in you.

Here are some simple yet crucial things that women should remember regarding financial literacy:

• Don’t hesitate to ask for clarifications: If you don’t understand something related to finances, don’t feel shy or intimidated to ask questions. It’s essential to have a clear understanding to make informed decisions.

• Make financial management a family affair: Engage your family members in discussions about financial goals, budgeting and planning. Creating a supportive environment where everyone is involved can lead to better financial outcomes. It could be as simple as buying a mobile, a TV or going on a pilgrimage or a vacation with family.

• Stay aware and involved: Even if someone else manages the household finances, stay informed and involved in them. We are not talking here of only updating the passbook, filing papers or signing a cheque. These are everyday tasks already handled by most women. Being aware of cash flows, bill payments and investments ensures financial stability and reduces vulnerabilities by helping to plug unnecessary and avoidable financial leakages.

• Learn basic financial skills: Understand how to operate a bank account, manage cash flows and effectively utilise financial products and services.

• Understand key financial concepts: Familiarise yourself with concepts like inflation, the compounding effect of money and the importance of risk management – life and health. Having a grasp of these concepts will help you make sound financial decisions.

• Protect yourself and your loved ones: Ensure you have adequate insurance coverage for life, health and property. Review policies regularly and ensure nominations are up to date.

• Explore investment options: Understand different investment vehicles and consider aligning investments with your values and goals. Be aware of the difference between insurance and investment.

• Be proactive: Take charge of your financial life by setting SMART goals (as we will discuss later). Regularly review your progress and make adjustments as needed. Check if your values are aligned with your goals.

• Stay vigilant against fraud: Be aware of common financial scams and take steps to protect yourself and your personal information.

• Practise self-care: Remember that managing finances is not just about numbers; it’s also about your well-being. Take care of yourself physically, emotionally and financially to lead a balanced and fulfilling life.

By keeping these simple yet effective tips in mind, women can enhance their financial literacy and confidently navigate their financial journey.

Once you are well informed about your financial life, the available options and what to expect from it, you will be in a much better position to take a calculated risk that can help you make smart and informed choices to enable you to reach your goal faster. This will surely boost your confidence.

The knowledge that is acquired and stored and not put into relevant action has seldom helped anyone.

Being prepared will help each one of us manage things seamlessly in case of the occurrence of any unfortunate event, whether it’s the loss of a loved one or a financial loss, or whether it is feeling empowered about the money you have gained and knowing what you’re going to do with it.

It’s time to take back control of your financial life! And I am proud of you … as you have taken this crucial step.

With this premise, let us step deeper to learn and understand some important concepts and the S.M.A.R.T.E.R way to wealth that every financially smart and empowered woman needs to know.

Excerpted with permission from Be Financially Smart: The Modern Woman’s Guide To Money, Nita Menezes, Westland.