It is often said that the two biggest problems in any relationship are too much money and too little money. Ask any of your relatives or friends to talk to their spouses about money matters, and you will most likely be met with an incredulous expression. In India, discussing money is largely a taboo subject within the family. In a joint family structure, it is often the head of the family who takes decisions on money matters. Even when young couples enter wedlock, they put off discussing money matters and do not have a clear allocation of financial responsibility.
Often, the spouse does not know about his/her partner’s total assets, income, bank balance, credit card outstanding, or even about investments. Successful marriages, however, are made through joint responsibility, even when it comes to finances. Hence, for “a happily ever after,” it is inevitable to address the elephant in the room.
To get you started, here’s 10 tips to discuss money matters more transparently with your partners:
Start off with family goals
You will be surprised to know how much sitting down and planning your goals makes a difference. When you write down your long-term goals like a comfortable retirement, nest egg for the future, education of children, etc, there is a lot more clarity and mutual confidence in the entire process. This is the right place to start off.
Joint bank account vs. individual bank accounts
While individual bank accounts are part and parcel of your professional life, it always makes sense to have a joint bank account and also a joint demat account for holding your investments. This provides transparency and easy access to your joint finances at any point of time.
Try to build an emergency fund at an early stage
What is an emergency fund? It is essentially a security cover for your needs. Emergency funds are liquid funds or bank balances you can fall back upon in an emergency and ideally both the partners should contribute to it. Maintain transparency on the quantum of balance and usage of the emergency fund.
Prepare a budget and track it closely
Write down your family budget and try to jointly penny pinch to the extent possible. It builds a greater degree of ownership in the entire budgeting process. The key to the budgeting process is to ensure that both of you cut your coat according to your cloth. More importantly, at this stage you must make savings your target and expenses the residual item.
Plan to exit your debt in a phased manner
At times both or one of the partners in a marriage may have pre- and post-marriage debt. Don’t make that a bone of contention. Instead, pool your debt together and work out how you can reduce the debt in a phased manner over the next 2-3 years. You will realize that it is a lot simpler if you are transparent with your partner and jointly work out a strategy.
Have fortnightly money meetings
Apart from your dinner dates and social parties, make it a point to meet at least twice a month to discuss money. Obviously, you cannot engage in deep discussions on money each fortnight. That is not required. Use the session as a forum to bounce off ideas or possibly share experiences and learnings from your friends and relatives. It can actually be quite cathartic and refreshing.
Share responsibilities for your tasks
When it comes to money matters, it is not just about pooling money. It is also about taking ownership for specific tasks. Who pays the bills, who does the budgeting, who monitors and who takes the hard decisions should all be discussed threadbare and agreed upon. Consensus is a powerful tool in such circumstances.
Bring up delicate subjects slowly but surely
You will often come across situations where you have a difference of opinion. You may feel that your spouse is spending too much or not doing enough homework on investments. Bring it up casually without becoming too aggressive. When you get too aggressive, your spouse will get into a shell and the essence of the debate is lost.
Be honest, trusting and give your 100% to the agreement
The basis of sustaining this money discussion in a productive manner is to be honest. If you need to spend for your relative, take your spouse into confidence. More often than not, they will only be too willing to support you and go that extra mile. But avoid the temptation of taking money decisions behind the other persons’ back. That is a classic trust buster.
Finally, stay and function as a well-oiled team
Great teams are always built by confidence and taking the other into confidence. Your two-member team can work best only if you agree and commit to make it work. The biggest need of the hour is to admit when you are wrong. That also gives you the moral capability to point out when the other person is wrong. Further, you can always hire a financial counsellor if you need advice on managing your money.
Money is an integral and indispensable part of marriage and something that cannot be ignored. Ensure that you speak about it with your partner, if you haven’t yet done so. Good luck with the planning!