Saturday, December 19, 2009

More precious than Gold!

A friend of mine (who happens to be a working-woman) once asked me - 'I am working. How can my prospective mom-in-law ask me 50 savarans of gold as dowry? I like this guy but this is ridiculous. I can't budge to all his mom's demands just because I like him.' 

Fair point. Why should she? But.. till her marriage, she probably can't openly fight with her prospective in-laws. It's a bit ironic that even today, the dowry system hasn't been uprooted in many sections of the society. How can we eradicate it? As the famous dialogue goes - to beat the system, you have to be part of the system. How about showing the greedy in-laws a detailed financial model showing them that the girl is much more precious than the 50 savarans? Here is what the numbers speak.

  • Ideally, if you are a working woman earning around 20,000 per month, you should ask your in-laws apporx. 1000 savarans (979 to be precise!). Suppose they say that they want 50 savarans, subtract it out and ask for 929!
  • The Net Present Value - NPV of of the working woman (only the salary included)  is Rs. 1.3 Cr while that of 50 Savarans is mere Rs.6.6 lakhs. Nearly 20 times more precious!


  • In Year 2040, the girl's Cumulative Future Value is around Rs. 13 Crores, while that of the 50 savarans is just 66 lakhs.


If you need the excel sheet to support these figures, let me know (for guys: to convince your parents not to ask for dowry.. for girls: (a) to make their in-laws feel embarrassed when you tell them your NPV or cumulative future value.. (b) to convince your hubby on why he should let you go to work (i.e. if you prefer to work). And if you are a non-working woman, don't bother - your monetary value could be very high as well considering the insane amount of household work you do - from teaching your kids to cleaning the vessels to managing your in-laws!

Hope the figures keep the greedy people's mouth shut!

Assumptions behind the model:

  • Gold price assumed at current market prices. Inflation assumed at 8% based on historic data from 1970 to 2009. If we ignore the 2008-09 boom in gold price, the figures could be still lower.
  • Girl's salary per month is Rs. 20,000/- with an increment of 10% per year and every 5 years, she gets a bonus of additional 10%. This is still conservative as wage inflation for Indians is as high as 15-20% these days.
  • The girl's NPV calculation is very conservative as well. No retirement or pension benefits assumed. Assumed to work only till the age of 55.