When Chuck Noll said “Every job is important, but no one is indispensable,” he certainly hadn’t kept the Indian working woman in mind! For us working women, the one person who is indispensable and brings an immediate sigh of relief and a genuine smile to the face when she arrives, is the house-help.
Our lives get complicated when she is on a long leave. The turmoil in her life cascades into chaos in our planned hi-speed schedules, to overcome which a lot of “jugaad” is needed. Retaining her and ensuring that things remain smooth is non-negotiable for us. Whatever the reason to do so, here are a few simple ways to add a lot of value to the financial condition of these indispensable women.
Typically, with this segment of people, awareness is a real issue. There are various government schemes that specifically cater to them. However, many of them don’t avail those schemes, since they are blissfully unaware of their existence. There are insurance (life, health, accident), pension, and home loan subsidy plans for such people. They also have only relaxed documentation for bank account opening.
In addition, this lack of awareness is also accompanied with fear when it comes to any paper-work and there is diffidence to visiting any “government” office. They feel unwelcome and would rather seek “advice/help” from those in their friendly neighbourhood, where they fall prey to “schemes” and exorbitant interest rates.
Making them aware of these schemes and getting them access to simple banking services will make a meaningful difference to their lives. You can help them with these at nearly no cost.
Here are five simple things that you can take to support your domestic help and ensure that she takes the first few baby steps towards financial security.
Explain and simplify for better understanding
At our place, I have started paying all the domestic helps their salaries through credits into their bank accounts. In one case, it was initially met with resistance and, on further enquiry, I realized that withdrawing money from the bank or ATM were not easy tasks for her. When I offered to go to the bank/ATM a couple of times to teach her to use the card, she was relieved. After these initial baby steps, I see comfort as we have now decided that she would save Rs 1000 from her salary and invest in some financial instrument for the long term. As an incentive, I offered to top it up with Rs 500 every month. She is now excited and plans to do so from next month after paying her kids tuition fees.
Create awareness on government schemes
All you need to do is help them open an account. People can a Jan Dhan account in a bank with minimal documentation. Once this is done, you can ask her subscribe to the government insurance scheme of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). In this scheme, at an annual premium of Rs 330, she would be eligible for a life cover of Rs 2 lakh. Of course, you need to ensure that her spouse too is definitely covered in this scheme. There is an accident insurance scheme – the Pradhan Mantri Suraksha Bima Yojana (PMSBY) – also available, which gives a cover of Rs 2 lakh for permanent total disability and Rs 1 lakh for permanent partial disability at an annual premium of Rs 12. It is extremely easy to enrol in both these schemes and they do not require any extra documentation.
Give useful personal finance advice
Domestic helps are generally very trusting of us and rarely contradict when a person of authority gives them an opinion. One of them told me about being called to a school meeting with a teacher who, after discussing school related stuff, tried to sell them an insurance policy that was absolutely not suitable for her. Many of the parents enrolled immediately for the scheme. I dissuaded her from the investment.
Instil the investing habit
We once were put in touch with a person who did not have the confidence or resources to afford professional advice. He works as a driver on weekdays and as a masseur on weekends. His wife works as well. Despite his circumstances, he sought to be financially savvy and hence kept seeking financial advice from his massage clients on suitable investments. One of his clients referred him to me to help him out with his investments. He took great interest in whatever I had to say and followed our advice to the hilt. He started by investing Rs 10000 a month in mutual funds. We had advised him to increase his contribution by 10 per cent every year and he diligently followed up for the increase at the end of the year.
Help deal with debt
Another person with a similar profile came to me through one of my clients, for professional advice. Later, when the same person decided to buy a house, I discovered that he was planning to take a loan at a very high rate of interest. On further probing, we found that he had not approached the proper banking channels and was willing to pay higher interest since he did not believe that banks would be interested in lending to him. With some counselling, he approached his own bank and after some efforts. He proved to the bank that he was credit worthy as he had income flows on the basis of his SIPs (systematic investment plans), and got a home loan at a reasonable rate along with an interest subsidy, which is available for low and middle income groups under the Pradhan Mantri Awas Yojana (PMAY).
A word of caution though. Make sure you send them to someone who will give appropriate and genuine advice. They would otherwise be better off with government schemes that have guarantees.
The satisfaction of having made a huge difference to his family’s personal finances is incomparable.(The writer is a Certified Financial Planner and Founder of Finwise Personal Finance Solutions)