Children often imbibe lessons simply by observing how their parents, especially mothers, manage household finances. This Mother’s Day, we spoke to four women business leaders, of different generations, to understand what lessons from their mothers helped shape their money habits. While some mothers were homemakers and others had their own careers, being sensible with spending and saving, being cautious with debt and recognising value were common threads that ran through their outlook towards money. Here are five enduring money lessons we culled from the stories that the women leaders told us about the way their mothers dealt with money.
Save regularly, irrespective of the level of income
This is preached from all money pulpits and has been practised by mothers across generations: living within your means and finding savings within it. Shanti Ekambaram, 56, president, consumer banking, Kotak Mahindra Bank Ltd, remembers her mother’s emergency fund that the family would have to fall back on every month when the income would fall short for unplanned expenses, like in all middle-class households of those days. “Gupt dhan” (secret stash) is what Radhika Gupta, 36, chief executive officer of Edelweiss Asset Management Ltd, called her mother’s emergency fund and it taught her that even in a limited budget, you can save for a rainy day. “The way my mother kept saving small amounts to be used when required reminds me of the later-day systematic investment plans (SIP),” said Ekambaram.
To be able to manage with what you have and set priorities are lessons that Shailja Dutt, 49, founder of Stellar Search, a global leadership advisory and talent management firm, learnt from her mother’s experience. “I come from a wealthy Marwari family but my mother was left penniless with the responsibility of raising three children when my parents got divorced. My mom would have to think through every small expense as she tried to run small businesses from the house to give us a good education,” she said.
Supriya Paul, 25, co-founder of Josh Talks, an impact media platform, remembers her childhood when her mother insisted that she keep away the money she got as gifts on birthdays and other occasions. “I thought it was unfair that I was not allowed to spend the money that was all mine. But my mother wanted me to save it for something that will have value instead of splurging it on meaningless things,” said Paul. And she realized what her mother meant when 10 years later she was able to buy her brother his first X-box with her own savings.
Use debt with caution
For mothers, debt was a no-no especially for consumption spending. Dutt remembers debt as the root cause of her mother’s troubles while she was growing up and to date has stayed away from borrowing completely. “I run my credit card like a charge card,” she said. Dutt’s debt phobia goes to the extent that she has stayed away from it even for her multiple real estate purchases. “All my assets are self-funded,” she said.
Ekambaram recalls the stress her mother went through to pay off the one borrowing the family had made to buy property. “In those 3-4 years, the constant refrain was that money should be saved to pay off the loan and all but bare necessities were cut out of our lives,” she said. “I carry that conservatism of leverage to this day. Whenever I have taken home loans, I have paid them off in 3-4 years,” she added.
Paul, despite being part of the millennial generation which typically thinks little before taking on debt for consumption spending, has been grounded in her mother’s philosophy of not being financially liable to anyone, including banks. But she has seen the advantage of using credit facilities in her business and is open to using it for personal needs too, but within her capacity to service the loan.
Be financially independent
Dutt ascribes her fierce need to be financially independent to seeing her mother struggle to manage after a messy divorce. “I am happily married and a large part of the happiness comes from keeping our finances independent,” she said. “We each manage our own money and investments, though we sit down together to do an annual exercise of setting financial goals,” she said.
To be financially independent and to be responsible for your money was an important lesson that Gupta too learnt from her mother. Part of being financially independent is being financially literate and being able to take care of your own money matters. Despite being the managers of household money, women have been reluctant to make money decisions for themselves and the household. “Learn to manage your own money so that there is no dependency. My mother was dependent on others for help and many people took advantage of her,” said Dutt.
Ekambaram calls it the financial literacy quotient. She refers to the three pillars of women empowerment—education, financial independence and financial literacy. Paul recalls a mock stock market investing exercise that her parents introduced her to wherein she was given an imaginary ₹50,000 to invest in stocks of her choice. She did the research and built her mock portfolio. “A year later that portfolio had grown to ₹1.8 lakh. Nestle was a big winner,” said Paul. She believes this experience made her comfortable with the idea of making real investments.
Women are becoming more comfortable with managing their own money, said Gupta. When women can manage their career and their homes, money is not a complicated thing to manage despite the jargons, she added.
Plan ahead and spend wisely
Dutt looks at the opportunity cost of every spending decision she takes. “I can be extremely extravagant on things that are important to me and frugal on others. The trade-off is always happening in my head,” she said. Paul learnt the importance of knowing the value of anything you are going to pay money for from her mother’s haggling ways. “The idea of worth is embedded in my psyche. Even in my business I am always looking to get the best deal,” she said. And just like her mother had a list of things she wanted to purchase and took just enough money for that and no extras, Paul too keeps a tight check on planning and spending in her businesses with no room for unnecessary expenditure.
Ekambaram too remembers the planning that went into any small expenditure that was not routine since there was no surplus money. “I have never gone away from the middle-class attitude of planning, saving, deciding how much I will spend,” she said. Ekambaram believes that you can manage any crisis or emergency if you plan well. It is important to keep aside money for savings before you decide on discretionary expenses is her advice. “My mother taught me to have a very balanced head on my shoulders,” said Gupta. “She also taught me that when you earn well you enjoy your money but also save money. Both are important,” she added.
Be flexible and learn to manage with what is available
Being flexible with how income and expenses were managed was a skill that mothers seemed to be experts at. Gupta puts it down to necessity. “In my mother’s case, she had to manage money in different continents and that meant starting from the basics each time. She would have to learn about the new currency and its relative value and then strategize household budget to adapt to changing lifestyles,” said Gupta, referring to the family having to move to different countries every three years on account of her father’s career as a member of the Indian Foreign Services. Ekambaram still finds it amazing how her mother managed the household budget on whatever money was allocated to her. “Learn to manage within the given framework—whether it is business or money,” she said.
While the lessons from their mothers have stayed with them, there have been differences too primarily because of the changing circumstances and attitudes. “My mother was not much of an investor, she was more of a saver,” said Gupta. “But after reading and listening to my interviews, she wants to know more about SIPs and how to invest.” Dutt sees some difference in the attitude to money between her and her mother. “I tend to be more cautious about spending a windfall and would rather use it to secure the future than spend extravagantly,” she said. She now helps her mother manage her money and live more independently.
Ekambaram believes the only contrary theory that she practises to what she learnt from her mother is her preference for risk. While her mother sought 100% safety, Ekambaram is a risk taker and a high equity investor. She sees the attitude to money of the younger generation today as the exact opposite to that of her mother’s generation. She makes it a point to talk about the importance of categorizing and prioritizing needs, keeping an eye on expenditure and saving and investing according to risk preferences. She hopes this generation will understand the importance over time.