Celebrating my domestic help and her financial acu(wo)men!

Shampa is a 30-year-old Bengali girl from a small village. She is married but single as her husband left her and her young son to fend for themselves. She has been working in Delhi for the last ten years. Her son lives with her parents. She works not only to support her young son but has created a support system for her parents, her two brothers, her sisters, and their children too.

One would think she would need the help of a financial advisor to do that and that maybe I helped her…. Wrong!

Au contraire, I have learned a lesson or two from her over the last four years she has been with me.

Over the last few years, I have seen her save 15,000-20,000 every month from her earnings. As the amount accumulates in her bank account, she buys plots of agricultural land. Unknowingly she is following the first principle of ‘saving regularly and investing regularly’. She gives these to her father and brothers to manage who with the help of hired labour grow various crops. The income so earned is shared gives her family a livelihood whereas the land has appreciated in value. She says this is for her son’s education and her old age. She has financial goals – ‘children’s education’ and ‘retirement planning’ and she is preparing for them by creating long-term assets.

In addition, a few times, she has acted as a money lender where a piece of land (Rs. 1-1.5 lakh per acre) is the collateral and interest is in the form of income earned from growing and selling the crop on that piece of land till the borrower returns her capital. This income is shared between her and her father which in the future will become the capital for further investment. She is applying the principle of ‘compounding’.

Last year, Shampa asked me to collect three months of salary for her. When it was a lump sum, she asked me to wire it to her brother in the village. With this amount, her brother bought a pregnant cow that cost him 40,000. The cow gave birth to a calf in a few months. He milks the cow every day, sells it for 40 per litre and earns a living. The cow is expected to give birth to another calf in a few months’ time and in some years, Shampa expects to gain by selling the cow and a few of the grown calves, recovering her capital, and making a return. The cow dung is used as fuel and they only use 1-2 gas cylinders in a year. Instinctively, she is investing in ‘growth assets’ with a ‘regular income’ too.

Last month she bought two female goats for 5,000 each from her savings. Each goat will give birth to four kids in six months. She plans to sell these in a year’s time when they would have grown up a little bit, recover her capital and make a handsome return. The cost of one cow is roughly equal to right goats. Shampa is making an investment in small assets also and following the principle of ‘diversification’ and ‘asset allocation’ so beautifully.

The livestock not only gives her family in the village an income stream which reduces her guilt of her family looking after her son but in the process, she is depending on these living assets to multiply and make her a profit. Land and (reproductive) livestock in some sense are non-depreciating assets.

Under the PM Gramin Awas Yojana, she has taken the govt assistance, contributed her capital, and built a house in the village which is where her family now lives. Additionally, last year when Shampa’s sister was diagnosed with breast cancer, she contributed to her treatment, which involved chemotherapy in Mumbai. She also funded her younger brother’s education in addition to funding the air ticket for her older brother to go to Malaysia where he has got a job. And she has a LIC policy which gives her a small cover. Though I have encouraged her to keep aside some funds in the bank for a rainy day, she prefers to invest in what she understands best.

Shampa, without any formal education, with simple common sense at her command, understands the meaning of creating income-generating assets, investing for the long term and getting a return. These assets are not only in the form of land, or livestock, but also the goodwill she has created with her family, by being their backbone in their hour of need. The spark in her eyes when she talks of her plans lights my heart

We talk of New India, and this sounds like New Bharat to me.

But is this new?

Haven’t women done the same for centuries? From running households on thin budgets to stashing money away that is often used during emergencies, to making funds available for the dire needs of the family.

Why do we propagate the myth that women are not savvy in finance? Just because they prefer to focus on cooking, rearing children, cleaning and looking after the sick in the family, among other tasks, in most households they have relegated the investment planning to the men in the family.

We can all learn from the financial acumen of Shampa, imbibe the principles of saving and investing, create income-generating and growth assets based on our financial goals, take advantage of compounding in the long run, and pave our own paths towards financial independence. We should not let social conditioning come in our way. Let’s break the barriers within and break out! Let’s set ourselves free to empower ourselves.

Rajul Kothari is a partner at Capital League, a boutique wealth management firm.

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