With rapid progress taking place, household structure is also undergoing a change. Discarding the age-old concept of running a family on a single income, women are increasingly joining the workforce. This has given rise to the trend of 'Double Income' family, where both husband and wife are actively working. However, despite being categorized as a Double Income family, most of the couples find it difficult to realign their financial goals, with each other. So, here are some handy tips to help such double income families go for a better financial planning.
Joint income & expenses
- Instead of choosing to keep financial data confidential, a couple should try to look at their incomes and expenses jointly. There are numerous benefits of combining income rather than managing it on an individual basis. Once a couple starts looking at things from this perspective then they have better clarity about their financial picture and are better prepared to achieve financial goals.
Asset ownership should be separate
- From taxation point of view, a couple should own assets on an individual basis. This is the best way to save on taxes and will also help if the relation hits a rough patch. Likewise, a partner could choose to keep a spouse as co-owner if they want to involve them equally. In the same way, EMI payments could also be split between two in proportion of incomes.
- A couple should primarily fix any insurance gap in terms of medical insurance, home insurance, personal accident insurance and life insurance. A family runs on the income of both individuals, and hence appropriate cover should be in place to safeguard against unfortunate events.
Keeping the conversation on
- It is important that a couple should not come to hit 'silence' over finance related matters. The conversation needs to keep flowing as financial goal and responsibilities often change. The practice of engaging into financial aspirations and future goals will keep the couple aligned to each other's financial objectives.
- In a double income family, one could be a spendthrift while the other partner could be conservative about spending. Hence, a balance has to be maintained without one taking an influence over other. Similarly, a couple could have varying outlook over risk appetite, but the right thing to adopt is taking a middle path that satisfies the risk-taking ability of each.