Stitching It Together
Studies clearly indicate money as one of the top issues between married couples. Here’s how to keep your finances, and your marriage, in shape.
Key to a happy marriage is dependent on many factors, from compatibility in sex, confluence of interests and status of families to career aspirations. However, modern couples today realise the importance of money and its role in keeping them together in the thick of things. In a recent poll of over 2,000 British couples by a legal firm Slater and Gordon, money was listed as the top issue between married couples for parting ways, with one in five saying it was the biggest cause of marital strife. Crunching more numbers, a Citibank survey revealed 57 per cent of divorced couples cited money problems as the primary reason for ending their marriage. According to the latest survey by Ramsey Solutions, a company in financial education, money fights are the second leading cause of divorce after infidelity. Studies clearly indicate money as one of the top issues between married couples for parting ways. Here is how you can handle the financial aspect of your conjugal life. By
All these facts point towards financial independence of couples and importance of fixing money issues. Each partner has his/ her individual career and aspiration for financial independence, hence, it is important to align individual goal and knitting a strategy that can lead to the couple goal. We spoke to experts to list important things that can lead to a better financial health.
Separate accounts
It is not strange that many people in the West prefer to run a credit check on their prospective partner. There is no harm in getting a professional to evaluate individual goals such as retirement plans and investment goals even before you decide to get married. There is no fixed formula to follow when it comes to managing money. “If both partners are earning, you should maintain separate account for investment purposes. You can definitely share your household expenses by opening a joint account. Separate account helps you bifurcate the individual expenses and gives you the feeling of independence,” says Melvin Joseph, Founder, Finvin Financial Planners.
It is often advised to maintain three accounts that include a joint account and individual accounts for each spouse. Of these, the joint account can be used for household expenses and each partner’s contribution in the joint account will depend on his/her income. It is always better to have separate accounts, especially from a taxation point of view.
Empower with knowledge
It is important to share every small detail of financial information with your spouse. “You should create a document and hand it over to your spouse containing even very minute information. In case of any premature death, family needs to know investments detail and various utilities that need to be closed or changed,” says Joseph.
It should not be the case that only one person’s income is used for expenses while the other’s income is used for saving. According to financial planners, the share in household expenses should match the share in household income. For instance, if one person’s income is used for expenses while the other person’s account goes towards A Citibank survey revealed 57 per cent of divorced couples cited money problems as the primary reason for divorce savings, it can create troubles and jeopardise the relationship. Couple should ensure their spending is in control and they don’t go overboard in maintaining a lifestyle that they can’t afford.
“Even in cases where non-working spouse doesn’t take any interest in money management, at least half of emergency fund should be kept in non-working spouse’s control,” says Swapnil Kendhe, a financial planner and founder of VivekTaru.
Check on nominations
It is a common error that newly married couples don’t update their nomination details in their accounts and other investments. One might want to change the nominations for investments post marriage because prior to that you normally end up nominating siblings or parents.
One of the most important aspects of financial planning which often gets neglected is insurance as couples don’t buy adequate insurance cover or ignore adding each other to their corporate insurance policies. Remember some corporate medical allow spouses to be covered and people forget to update the policy after marriage. Never undermine insurance as both partners are equally important.
Review goals
Some of the big budget expenses at the onset of a marriage could be buying a car, home or even higher education. Hence, it is better to discuss the goals and create a strategy in advance so that the same can be achieved within that timeline. There could be a situation when you may want to put one goal on hold to fulfill another, so prioritise goals as a couple. After the goals are aligned the next step is to take a stock of documents so that it is easily accessible. However, at any point in time you find all this too much exhausting, then get help from experts to sail through smoothly.
From the February 2019 issue of FHM India.
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