Getting married does not count as a plan

KARACHI: Meet Zara, a young career woman from Karachi*. Zara, aged 23, graduated last year from one of the finest colleges in Pakistan and now works at a bank. She realises that her life will likely be very different from that of her mother and she wants to ensure that she will have the financial wherewithal to retain the kind of independent lifestyle that she is by now used to.

Traditionally, women in Pakistan simply got married off and that was the extent of their financial planning: hoping to land a well-to-do husband. Yet in a society that is rapidly changing and where women with careers are no longer held in contempt (or at least we would hope), financial planning for women has taken on contours that it never had before.

Women, even those who plan to pursue careers for the entirety of their working lives, have slightly different needs from men when it comes to their money and as such need to incorporate those variances into their financial plans. For instance, most women will take at least a few years off in the middle of their careers to bear and take care of young children. On the flip side, given the fact that men still feel traditionally responsible for the finances of the household, women should also be able to save more than men.

Zara is in luck: her parents plan to pay for her graduate school. So the savings from her current job can go towards her long term investments as well as her medium term financial needs. She gets paid Rs35,000 per month of which she is currently saving about 80% since she lives with her parents. Yet she also realises that she will need to buy a car, save some spending money for graduate school in the US and then begin saving for her retirement.

For her long term savings, given her slight aversion to risk, I advise her to put away Rs10,000 every month into an asset-allocation mutual fund. She also plans on buying her own car soon and asks whether leasing is a good option. Given the fact that she has no immediate transportation crisis, I advise against leasing and suggest that she save another Rs10,000 a month in a money market fund for a car. In about two years, she should be able to afford a second-hand vehicle worth about Rs300,000.

I also ask her to start saving for the down payment on an apartment of her own as soon as she has bought her own car. Even though she may live in her parents, and eventually her husband’s house, every woman should own her own property. The sense of security, coupled with the rental income, are worth the price.

Name and personal details changed to protect privacy

Published in the Express Tribune, June 14^th, 2010.