Itīs a stimulating feeling to merge your life with someone, but it also takes some thought and considerable effort. The key to making the marriage work is striking a balance between compromise and maintaining a strong sense of your personal goals and aspirations. That includes the domain of finance as well.
The value of money is whatever we credit to it. For one person itīs safety; for another, itīs position and for a third person it might be freedom. Money becomes a reflection of a personīs basic needs. And it is also the primary reason for conflict in a marriage. Do debates about money with your hubby rapidly escalate into bitter quarrels? Donīt be disheartened if this is a common occurrence in your married life. There are steps you can take to start working as a team. If your lines of communication are based on an understanding of each otherīs money habits, there is a much better chance that fiscal fights wonīt destroy your marriage one-day.
Try to perceive each others fiscal ideology
How you choose to spend money today has its foundation in the emotional baggage you carry from childhood. If money was tight in your growing years, you will have been conditioned to watch every penny even if it is not necessary today. If you come from an opulent background, you might have a tendency to spend freely without thinking about how you will pay the bills if you face a financial crunch tomorrow. Understanding each other will give you the base to work out any fiscal problems that might be likely to arise.
Review your goals often
You have to be certain that you are on the same wavelength and that the investment choices you are making today will allow you to meet each otherīs individual goals as well as your joint goals, tomorrow. Your plans should be flexible and should be reviewed often. Goals and priorities change with time. Your investment plans must change with them to secure a financial future. And donīt hesitate to plan big. Maybe your goal is to start your own business. Or, you might want to retire early and go globetrotting. Whatever your aim in life, try and perceive each otherīs fiscal aspirations and how you will meet it together.
Implement your plans
Discuss how you will handle everyday money matters, as this is where the maximum amount of money flows out. Every person spends money on indulgences that seem ridiculous to others. When you were single, you were responsible only for yourself; if you chose to eat Maggi noodles for a fortnight so that you could buy hot leather pants, it might have been perceived as sensible. But now you have another person to take into consideration when you strain your finances, because maybe blowing money on a designer outfit means you canīt afford a foreign vacation. This is a good time to allocate yourself an indulgence "allowance" which will make it easier to differentiate between expenses that are indispensable to your happiness - like yoga lessons, CDs etc - and those you can live without. If both of you stick to a preset budget, youīll be less likely to get into fights about spending money and have a better shot at saving for your collective future and your joint dream, be it a home of your own or a trip to the States.
Plan your savings and investments -:
- Savings Account Joint vs. Individual
A very important decision is whether to maintain separate accounts or pool your resources towards a joint account. This is an individual decision depending on your situation.
Joint Account -
If you want to go in for a joint account - the first thing to do is check with your bank to find out about the costs and benefits of pooling your resources. Frequently, you can save a lot of fees and get better interest rates by pooling your funds. And there are advantages -: When you have a joint bank account, you donīt have to fuss with figuring out a fair way to divide payment for common bills. With one account to which you both contribute, you can just write one check for the groceries, next summerīs vacation, and so forth and be done with it.
Individual Account -
Keeping separate accounts on paper can make it easier to track where the money is going and maintain your focus on your personal budget. With separate accounts, you donīt have to account to your hubby for your spending. If you want to splurge on a new outfit or your umpteenth pair of shoes, no one can give you a hard time about your choice. If you prefer instead to build up a tidy balance in your account for a proverbial rainy day, no one can question your motives.
The best of both worlds -
Keep a joint account to pay mutual expenses such as your rent or a new car or furniture for the home, and maintain a smaller separate account to pay for personal expenses. Itīs the sensible, savvy thing to do. The amount will vary with your circumstances, but even a few hundred rupees a month means you can splurge a bit without accusations from your hubby about endangering the savings. But itīs also wise to have a joint account earmarked to pay for all the things you do together: the rent, your car, vacations etc. You may decide to contribute equal amounts to your joint account or, if one of you makes more money, you can come up with an appropriate percentage.
- Investment strategy
If both of you are working and have separate investment styles, discuss your money and investing philosophy with each other. Be sure you understand each otherīs differences in investing style. Make investments both together and separately, but be honest with each other about what you are doing. Money secrets interfere with financial success.
Gold at one time was considered the best investment to beat inflation. However, this is not the case any more, as prices of gold have been on the decline lately. Unlike shares and fixed deposits, gold does not bring any regular income, and is considered the last resort as an asset.
Investing in stocks is a risky venture because your assets are not savings anymore. When you decide to invest your savings in stocks, they take the form of Risk Capital. Sure, you must invest to protect your funds from inflation but that need not necessarily place your financial future at a liability. There are low risk investments that exist in the market place. You can contour your investments based on your allowance for risk. However, if you are saving for your childs education and vacations, this is a chance you should ideally not take.
Building up a surplus fund to cover an annual vacation with the family is a good plan. This type of savings fund can also be used for opportunities such as buying expensive furniture, a car, etc. Save 10% of your salary towards this fund monthly. Once again, regular is the keyword. And since saving for a vacation/car is something that most couples might think of, it might be a good idea to invest a lump sum in a LIC scheme that would double in a predetermined passage of years. This has the potential of rewarding you with a sizeable kitty.
Consult an established Money Manager about investing in bonds. The key information to know about a bond in order to compare it with other potential investments is the yield. You can calculate the yield on a bond by dividing the amount of interest it will pay over the course of a year by the current price of the bond. If a bond that costs Rs.1500 pays Rs. 150 a year in interest, then its current yield is 10%.
- Credit Cards Joint vs. Individual
Advantages - It is a romantic notion that a key part of being married is sharing. And in this context, you might think it is a good idea to have a joint credit card. If you do this, designate it for major purchases such as furniture, a washer/dryer or your vacations and vow to one another that youīll faithfully pay off the balance in full each month, on time.
Disadvantages - If you have a rocky path and wind up getting divorced, you donīt want to be responsible for your ex-spouseīs debt. I know this is the last thing one thinks about when getting married, but you need to protect yourself from the unknown. Another drawback in joint credit cards is that you might have a spotless credit history, but your husband may have some debts; if he falls behind on payments, it will be reflected on your record.
The best solution - Even if you and your partner decide to merge finances, always keep one credit card in your name and your name only. A personal credit rating might be indispensable in realizing your dreams - say, if you want to take out a loan for a startup business, not to mention in reestablishing yourself if your relationship fails.
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