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With Valentine's Day just around the corner, many of you would be thinking of embarking on a relationship. Also, with the marriage season just over, many of you might have already started on a wonderful journey. But if I have to ask just one question, 'How many of you have discussed your finances openly with your spouse/partner?' I am sure the answer would be 'not many'.
While it is okay to overlook this aspect during your initial period of companionship, things change when you get married.
In India many women are still housewives where most of the times, they have no clue as to how much their husbands earn or how much debt they have or where they have invested money or how much is the family or their husbands are insured for. Many of you would be able to relate to this. But is it good? Definitely not.
In fact, recently, I came across a couple with severe financial trouble where the husband had lost a fortune while trading in the stock market. Before he could realise, he was neck deep in debt. To clear off his debts, he took loans. But he could not cope with repaying that too and soon moneylenders started knocking on his door. That was the time his wife realised that there was some trouble.
When things got really out of the hand, her husband finally confessed. The wife said if she had known about the problem earlier she would have somehow forced her husband to take professional help or at least put an end to his trading habit or even taken up some job to help with the finances.
We often hear this. It is an unfortunate scenario wherein husbands do not involve their wives in financial matters.
But why is it important to discuss finance and be financially compatible? Here's why:
Financial personality: One partner can be a spender whereas the other can be a saver; or both the spouses can be spending heavily or both can be savers. If a couple knows each other's financial personality well, it helps in charting a financial plan to save them from a lot of trouble in the future.
Goals: Every individual has goals in life. When a couple embarks on a journey where they spend their entire lives together, it is very important to set their financial goals well in advance. Every individual is different from another and so are her/his goals. Therefore it is very important that they discuss them and then set the goals, and chart a route to achieve them. Always remember to divide the goals into three parts: Needs, responsibilities and dreams and work towards achieving them.
Budget: This is the base of any financial decision or plan. "Our day-to-day expenses are common and hence I discuss them with my wife and plan for them accordingly," says Kunal Shah, 34, a businessman who, is into the 5th year of a happy marriage.
While preparing a budget it's necessary that both spouses sit down and discuss their expenses. Very important since they will not miss out on budgeting for any expenses but also stick to it if they have prepared it together.
Communication: It's the key to any successful relationship. Communication between spouses also includes discussing financial matters. As seen from the above example due to lack of communication from the husband's side, both the partners faced problems from which they will take a long time to come out of.
"Communication is probably one of the most important aspect for a successful marriage. Because these days women have an important role to share in financial responsibilities, and it is obvious that when they do it they want to participate in financial planning," says Paolomee Adani, a 30-year-old IT Professional.
Financial structure: One of the other important reasons to discuss finances before marriage or at the start of a courtship is that you know how you are going to utilise your hard earned money. Say if the husband's income is utilised for meeting daily expenses then the wife's income should go into saving for their goals or future.
Many a times, husbands do not feel comfortable asking for financial help from their wives (ego problem?), which should not be the case. This understanding helps avoid any financial harm later.
Money management: Generally financial literacy of both the spouses/partners is not the same, hence the need to decide who will manage the money. In India, generally, the male in the family handles money even if he does not have the time, from his busy working life, or the knowledge to do it. This can lead to mismanagement of your money and in turn financial problems. If the couple feels it is difficult for both of them to manage their own money they should seek financial advice.
Whether you agree or not, the truth cannot be denied that money does form a very important part of everyone's life. When you start a new life with someone you expect to understand all there is about him or her. So why should monetary aspect be any different?
The author is a chartered financial planner and can be reached at dhanplanner@rediffmail.com.
Illustration: Uttam Ghosh