Does your spouse know?

Seema Desai was devastated by the sudden demise of her husband. The children, though with her then, were soon going to leave to return to their lives abroad.

And she would be left alone to fend for herself. To make matters worse, she had no clue about the monetary matters. As when it came to saving and investing, she had always depended upon her husband.

She had never completely understood terms such as mutual funds, insurance plans, tax saving, pension and retirement planning and so on. Money matters bored her to death.

And every attempt by her husband to include her in the financial planning had failed miserably. Her attitude had always been that as long as her husband was taking care of it, why should she bother?

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Today, the thought of having to cope with managing finances on her own was perhaps giving her as much stress as his demise.

To avoid such situations, one must ensure that he/she is accompanied by her spouse for each visit to the chartered accountant, financial planner, investment advisor or the likes.

So that, each one knows how, when, where and how much money is being invested or borrowed. Additionally, married couples must plan their expenses in conjunction with each other.

To this end, it is important that you draw up your budgets together and arrive at a mutually agreeable financial plan. This will help you streamline the expenses as well as up your collective investments.

Your family's comfort and happiness will eventually depend on how you manage your money. Buying a house, planning for you child's education, medical emergencies, family vacations, all require prudent allocation of resources.

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Plus along the way, will be unexpected challenges disrupting your meticulous planning. You, therefore require all the help and resources at your disposal and the sooner you bring in your partner, the more equipped will both of you be to plan for life effectively.

Bank accounts

The first step is to deal with bank accounts. In a democratic marriage, though the first instinct is to merge your finances, it is important to have separate accounts, too.

Of course, have a common account too, where you can pool in the money required for household and other common expenses. It is also equally crucial to have separate joint accounts, one for husband and wife and the other for wife and husband, even if one of them is not assessed for tax.

Payment of equated monthly instalments, credit card bills and even investments should be from the account of the person who is actually liable to pay for the expense or investment. This will help tremendously, especially while filing your tax return.

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Given that in the new Income Tax Returns form,  individual disclosures of high value transactions must be compulsorily made.

Property

Remember that real estate can be co-owned. Buy the property with both husband and wife having an equal share. The housing loan should also be taken equally and the interest and principal payments should be made separately by each from their respective bank account.

If this is done, each one is entitled to an interest deduction of up to Rs 1.5 lakh (Rs 150,000) under Section 24 of the Income Tax Act and a principal deduction of Rs 1 lakh (Rs 100,000) under Section 80C. So, between the two of you, taxes on income up to Rs 5 lakh (Rs 500,000) can be saved in these cases.

Expenses

Setting up a monthly budget is a great way to develop a mutually agreed upon vision of spending and saving habits in a marriage.

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First, you must make a small modification to the usual mindset. Normally, savings constitute of the amount left after deducting expenses from income. But, here's a suggestion: let expenses be equal to income minus savings.

It is the same equation, but redrawing it is more efficient for your finances in the long run. This will help you build a corpus to fund all your future goals.

So, starting next month, pre-decide how much you want to save out of your income and the balance figure will automatically make up your expenses.

Don't set too ambitious a target though. Start small and make the adjustments as you go along. This strategy will introduce an element of financial discipline in both of you.

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Sum

The above principles are applicable, to any couple, irrespective of whether both work or only one works and the other is a homemaker.

Making decisions about money is part of building a life together. Marriage at all times is about team work, so you need to work together, not in opposition.

Set life and financial goals together and spend your money in ways that will bring you closer to achieving those goals.

Remember as Robert Dodds so aptly said, "The goal in a successful marriage is not to think alike, but to think together." The same is true for your finances.

The writer is director, Wonderland Consultants.