Naira Kapoor designs clothing for women under three of her in-house brands. 10 months ago, she married Raj Malhotra, whom she had known for a few years and they had set clear expectations from the start. They fixed a daily schedule and divided their responsibilities equally.
However, finance was still something they hadn’t discussed yet. This conversation is one of the toughest to have with her husband and Naira is unsure how to express her views about money.
Career is her top priority at this phase in her life and she is being supported by her family. But, apart from the societal pressure on this newly-wedded bride, money matters are affecting her. Being the only child means having a certain amount of responsibility towards her parents.
Realistically, she feels women face certain issues, such as social prejudices, longevity, gender related illnesses, pregnancy, caring for ageing parents or spouses, greater health care costs, etc. that require special consideration.
Have you felt the same hesitation about having that tough conversation about joint finances as Naira does? Are you looking for ways to discuss this with your spouse, but haven’t found a way yet?
According to the American divorce statistics, disagreement on finances is the reason behind 50% divorces. Such issues if ignored over a period of time can drift you apart from your spouse. And the easiest way to resolve this conflict is by having an open communication.
Here are some simple actionable points to have a sensible talk about personal finances after marriage and kick start achieving financial freedom together. These are as follows:
Talk About Money
Ideally, this could be done before tying the knot, but doing it right after you marry is good enough.
Money symbolizes different things to different people. For example, power, freedom, love, sense of security, boosts self-esteem, etc.
You can list your obligations in front of your partner—remember you're sharing not simply to impart information to your better half, but also to seek a mutual level of comfort on regular expenses. If you have your parents or sibling/s as dependents, let your spouse know about in advance.
Money will not cover up the other relationship issues, but might fuel discomfort in other aspects of your relationship.
Hence, take the time to understand your partner’s belief system over money. Learn about what motivates your spouse about money. Why did he/she decide to invest in a particular scheme? Is financial security on top of his/her agenda? Or is he/she an active investor in the stock market ? Share your views and aspirations with each other—this way he/she will realize your approach and outlook towards money.
Have a budget
Do not start your married life with “I'm a saver and you're a spender”.
Instead a healthy approach would be: “We both spend, but on different things. Let's set a budget”.
Budgets, while not always easy to create and stick to, can be very rewarding. Eating out, movies, shopping, and the likes can often balloon out of control so fast, that you don't realize it’s even happened until the credit card bill arrives. If this ever happens, you don't need to panic, just know that you should together cut down on this category of expenses in the next month.
It does not mean cutting out on all the fun. But, it will give you a rough idea about our spending capacity. It will shed light on your money spending behaviour.
Try and stay within budget, but remember, that if in certain months you don't, be understanding, patient, and forgiving. Make up your mind to work towards getting back on track.
Open a joint account
A “yours, mine, and ours” system of money management often works best for married couples. It will be an eye opener about where the money is going. You can plan things together and this in turn will give a feeling of working as a team.
You may open a joint account, wherein both the partners proportionately credit a part of their salary to meet the daily expenses.
Often couples opt to have a joint account where the husband contributes, leaving the wife's income to herself. Start reviewing your joint account expenses each month to see where the money is going. Having a joint current and savings accounts for all household and overhead expenses makes it easier to pay bills.
Likewise, maintain separate accounts for personal expenses. This will help you build some financial autonomy (and avoid arguments).
Dealing with Debt
Similarly, discuss what you owe—debt is a major cause for a relationship turning sour. Avoid jumping to conclusions. Understand the reason for your spouse borrowing money—he/she could have borrowed to buy a house or for education, etc. Assess the family debt and your own compassionately. If your partner defaults a debt payment, address it jointly. And decide how to pay it off together.
Shared Financial Goals
Make sure you write down your financial goals and chalk out a road map that will help you as an individual and as a couple to achieve them. Also, discuss if you’ll share a dream or aspiration of building a holiday home, or traveling to a particular destination abroad, etc.
Financial goals help you make the right use of your money. Re-evaluate your financial goals and design a family financial plan.
One of the big life goals, of course is retirement. Another big and definitely more urgent one is, when do you plan to have children and how would you like to plan for their bright future? Children are priceless, but they can also be expensive. So, have a list of your life goals, for your kids and retirement to everything in-between such as new homes and cars, family holidays, and so on.
You will need a strong retirement plan, and it is advisable to seek the assistance of a financial planner or a financial guardian in your vicinity as soon as possible.
Invest individually and as a couple
Individually, you might want to plan for certain expenses without investments from your better half. For example, you might want to add to your parents’ retirement kitty, or surprise your spouse/family with a fully paid holiday. As a couple, you'll have a life together that will involve major expenses on your decided life goals. Invest towards these goals based on your time horizon to the goal. PersonalFN can help you do that. We are celebrating a decade of unmatched experience to select the best investments, and are offering this research for a massive discount of 75 per cent!
It is recommended to have both joint and individual investments. Remember however, to name your spouse as your nominee on any investments you do that are not joint with them.
Accountability
Remember, to hold yourself accountable for the mistake you have made. Avoid the blame game, instead take up the ownership and work out solutions for any kind of financial quandary. Worrying can be your worst enemy at such times.
Acknowledge each other’s views and it does not matter if your partner is contributing in terms of money.
Have an Emergency Fund
If you already have individual emergency funds, you can simply pool them, or keep them separate for lack of hassle, but know that they exist and they shouldn't be touched.
If you don't already have emergency funds, start building one together.
- Estimate how much your monthly expenses are going to be.
- Start saving towards around 6-12 month’s monthly expenditure as a contingency against all emergencies.
You can save in proportion to your incomes, or decide a better way that works for you as a couple.
To sum-up…
Money in a marriage can be dicey if not handled carefully. Remember to trust each other, be truthful, and put your entire sincere effort in your relationship, especially if you've done something they might not agree with.
If you form good financial habits as newlyweds, you will respect each other’s outlook towards money, and be able to achieve financial freedom together in the years to come.
Avoid being in a spot as Naira is in right now. Instead, work on facts and not assumptions. Have a clear communication. This works best over long-term.
If you need superlative value assistance in financial planning, reach out to us on 022-61361200 or e-mail at info@personalfn.com . We will happy to help you.
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