Sharing Is Caring
Your financial goals and money values may differ from your spouse's. You may be a gritty saver, and your husband could be a buccaneering spender; but that shouldn't necessarily have you running for the hills in panic
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Undeniably, getting married is a pivotal event in every woman's life. Along with the shared hopes and dreams for the future, comes the mildly distressing task of sitting down with your new husband and pooling your individual finances together. But while fun - not funds - will surely be at the top of your priority list right after your big day, it's critical to face the situation early on and have a sit down together on the topic of money. If you've got married recently, here are a few important financial planning considerations for you.
Be sure to discuss Personal Finances with your Spouse
Before all else, commit to communicating; money issues that are swept under the carpet can fester over time and create damaging rifts within your relationship. Marriage counsellors will attest to the fact that financial matters are one of the leading causes of marital stress and divorce, globally. For instance, in a 2015 survey conducted by SunTrust Bank at Atlanta, U.S, 35 per cent of respondents indicated that money was the leading cause of friction and stress within their relationships.
"Marriage brings in new complexities in your financial situation, and money can become a contentious issue amongst couples. It is best to have open communication with your spouse regarding money," explains Vinita Idnani, partner at Capital League, an all-women Private Wealth Management firm based out of Gurgaon, NCR.
Make adequate time to discuss important money matters such as savings, liabilities, investment preferences, who will manage the household budget and how, risk tolerance levels, existing insurance policies and investments, your individual spending habits, and so on. Resist the urge to awkwardly drop the topic of money like a hot potato each time it surfaces.
Identify Life Goals and Start Saving Early
Your financial goals and money values may differ from your spouse's. You may be a gritty saver, and your husband could be a buccaneering spender; but that shouldn't necessarily have you running for the hills in panic. What really matters is that you should arrive at a solid middle ground, and create an informal blueprint for your combined future very early.
Some urgent questions to ask are, what are your shared material aspirations ? such as a car or a home, at what age you'd like to consider starting a family, how often you'd like to go on vacation and where, will both partners earn an income or not, and the like. Jointly sign off on an action plan to channelise your regular savings towards these goals and make an early start, to reap the benefits of compounding.
Radhika Binani, chief product officer, Paisabazaar.com rightfully advises newlyweds to "find a common ground to build a strong financial plan, without compromising on each other's lifestyle choices".
Reconsider Your (and your spouse's) Life and Health Insurance Coverages
In today's age of rapidly inflating healthcare costs, not having an adequate health insurance coverage is tantamount to a gross and irresponsible misstep. If you're not insured sufficiently, an unexpected medical emergency could lead to your spouse having to dip into his own previously accumulated savings to fund it, and this may or may not go down very well with him.
If your husband chooses to include you into his existing family floater health insurance plan, remember that the coverage amount now 'floats' between an additional member; and it would therefore, be prudent to top up the existing coverage amount adequately to compensate for this.
"The requirement of health insurance for women becomes more imperative post-marriage. They can opt for policies catering to women specific needs and critical illnesses, or choose regular health policies providing extra benefits like maternal benefits and child care", advises Binani.
On the Life Insurance front, one or both of you might need to up your coverage amounts. If your husband is the primary breadwinner and you will jointly depend on his ability to continue earning, this is a good time for him to purchase a pure term plan with a disability rider - with you as the beneficiary, or top up his existing coverage amount. On the other hand; if you're going to be the primary earning member, you'll need to increase your own life coverage.
"Earning capacity impacts the need for life insurance cover. There are cases where women are higher income earners than their male counterparts and for this, they require a higher insurance cover to protect the family", explains Dilshad Billimoria, a SEBI registered investment adviser.
Adopt the strategy of creating three distinct savings pools
Financially smart couples choose to create three distinct savings pools right from the word go, namely: "yours", "mine" and "ours". Segregating the funds that you're accumulating for your shared goals from your personal discretionary spends goes a long way in curbing money-related friction and angst. It might surprise you to see just how much money stress evaporates when you embrace this pragmatic strategy.
"Usually, couples maintain a combination of single and joint accounts. But regardless of how the finances are held, it is important to have appropriate nominations in all accounts and investments", reminds Idnani.
In closing, a word in favour of complete and utter money-related transparency is warranted. Even the policy of segregating your individual savings pools shouldn't be misconstrued as a ticket to "hide" money from your husband, or vice versa.
Make sure that you and your husband have complete information regarding each other's assets. Likewise; if you've made a money blooper, own up and plead guilty, and encourage your spouse to do the same. After all ? you've got a whole life to build together now, and crests and troughs come with the package. As Idnani advises her clients, "the saying 'Sharing is Caring' applies to information on personal finances as well"!