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Married? 7 money tips you must know
Managing finances is furthest from the mind when wedding bells are tolling. But, once the honeymoon is over and couples start the business of day-to-day living, money begins to matter.
And if you aren't in step with your partner when it comes to spending, savings and investment, money can become a major marital issue in a marriage.
Here are seven tips on how couples can avoid arguments over money and plan for a secure future together.
1. Set common objectives
Once married, you have to plan a common future with your partner. Agree on the broad goals: buying a home, children's education and marriage, and retirement.
Once you've agreed upon this, you can work out the details -- how big a house you want, how big a loan you can afford, and how much to save for the downpayment.
You may not see eye to eye with your spouse on many of these details, but they can be easily ironed out in pursuit of common objectives.
2. Share information
In many cases, it's usually one partner who plays the primary role in managing finances.
Nadish Bhatia, group accounts director, Lintas, takes the investment decisions for his family because his wife Deepika, who works at Mumbai's National Centre for Performing Arts, "is just not inclined towards it and believes that I will do a better job of it."
Regardless of who takes the decisions, both partners must discuss all investment and spending decisions and be equally aware of the shape of their finances.
Take the case of Ujjal and Aparna Bhattacharya, who have been married for five years and work in software and production engineering respectively.
While it's Ujjal who takes most of the financial decisions, he keeps Aparna in the loop as he thinks it fosters mutual understanding.
Responsible spending and accountability is a must for married people. Tell your spouse when you're spending something. You don't need to show him/ her your purse before you step out, but returning home with an LCD TV or a diamond ring one fine day without informing your spouse is a no-no.
3. Bank on togetherness
Do you need to keep separate bank accounts or go in for a joint one?
Separate accounts are good for couples who want a degree of independence and not be in one another's way all the time, which can be a liberating experience. But a joint account has distinct advantages. For one, it creates a sense of togetherness and unity, which is vital for a successful marriage.
There are some practical advantages as well. For instance, both partners can operate it to spend on household expenses. And, since all the records are in one place, it's easier to keep tabs on spending.
It's also helpful when either partner is irresponsible with the finances. You can immediately find out if your spouse has spent huge amounts and curtail such spending. Most couples we spoke to swore by a joint account for household expenses.
Another option is to take the middle path, and have separate accounts and a joint one for some expenses. You and your partner can decide on how much each puts into the joint account, depending on how much you earn and your monthly expenses. This way, you have a degree of independence while retaining that sense of togetherness.
Suparn Verma, debutant director of the just-released film Ek Khilaadi Ek Haseena, shares the household expenses with his wife Radhika, an HR consultant. The two put in a predetermined amount into a joint account that's used to meet expenses. "One of us may put in smaller amounts sometimes, but that's never been an issue between us. It's a marriage after all, not some business relationship," says Verma.
4. Manage differences
Often partners may have different investing styles. While you may be a high-risk, high-return investor, preferring to invest in stocks, real estate, company deposits and the like, your partner could be conservative and prefer safer options like bank and post office deposits.
Devang Shah, Mumbai-based certified financial planner, points out the example of a client who favoured the stockmarket, while his wife was into art.
Says Ujjal: "I go for the stock market when I want to invest, while my wife likes to play safe with LIC policies and fixed deposits. Of late, however, she has taken an interest in stocks and asked me to invest some of her money in them."
"It's not like it's your money or my money. It's our money and we are working towards making it grow. Ideally, there should be openness between partners. When one partner comes up with a smart idea, the other should be open to consider it. There shouldn't be any ego hassle," says Bhatia. "If you are able to complement each other financially and can help your partner in turning his or her dream into reality, then it's simply great!" he adds.
If conflicts do arise, the smart thing to do is to keep separate investment kitties. Shah says men and women may have unique investing styles. "Women have a holistic approach to financial planning, while men are keen on making fast gains," he says.
5. Talk while you spend
While partners look at many factors to figure out whether they are compatible or not -- physically, temperamentally, mentally -- financial compatibility is the last thing on their minds. Aparna, for example, feels that Ujjal sometimes spends too much. She balances it by saving a bulk of her earnings in low-risk options.
Says Shah: "Both partners should understand the financial decisions taken by them as a couple, since their implications are felt by both." He encourages his clients to visit him along with their spouses. An open talk with the financial advisor, he says, will "spur healthy discussions at home."
6. Stick to a budget
There are many advantages of having a monthly budget. The most important is that you can keep expenses in check and find out when you are straying from your financial roadmap. It also helps you stick to your savings target, since your spending has already been predetermined.
Network engineer Yezdi Rabadi and his fashion designer wife Amrita meticulously maintain an account of their monthly expenses and stick to a budget. "We fix a ceiling for our expenses. Though we exceed the figure more often than not, it allows us some kind of control over our money," says Rabadi.
7. Plan your estate
Estate planning is important for couples, says Shah. Make sure you have a will. Most people avoid making a will or procrastinate over it, causing problems for their successors.
In addition, name your spouse as a nominee for every investment you make individually. "Put your will in place and decide on a power of attorney for your spouse in case of untimely death. Most importantly, plan all this when you are in the best state of mind," says Shah.
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