Personal finance for lovers - couples & cash

Love is complex enough. When you add money into the mix, it can further complicate matters. Money may not buy you love, as The Beatles once sang, but fighting about it can kill your relationship. So what should couples do about their cash?

A couple look at the sunset at a seafront in Mumbai in this December 2008 file photo. REUTERS/Arko Datta

What to do if you are married?

• Jointly identify your financial goals: Every year you must have a focused conversation on your family’s financial goals and whether you are on track to meet them. When do you want to buy a house, will you need to take a loan, how much will your daughter’s wedding cost, what about her education, when do you want to retire, how much will it cost….all these items and more need to be discussed. You must not avoid dealing with these matters.

• Prioritize: Do you want to buy the latest LCD television, or is the laundry washing machine more important? Money decisions should not be the right of just one spouse, but these should be openly discussed between the two spouses so that each feels a part of the decision-making process.

Most people will have to make compromises in what they can afford at any point in time and each spouse should understand why a certain course of action is important or necessary.

• Choose the right time to talk and make rules: Unless you make time to talk about money matters, you might always have something else that keeps you busy. As result, the tension might build and you never address important financial issues that absolutely need your joint attention.

When is the best time to talk? Is it first thing on a Sunday morning, or after dinner when the kids have gone to sleep? Is it really necessary to have the cricket match on TV in the background when you are talking?

Figure out what works for you. Do you have a rule in place that you will not get agitated about money but rather behave in a civilized manner without getting angry or animated when you talk?

• Think about money and your kids: What kind of values do you want to give your kids about money? What are teaching them about financial habits that they will pick up from a young age? Will they get weekly pocket money, or is it a case of “my dad is my ATM”.

Do you let the grandparents spoil your children with gifts and money every time? What kind of gifts do you give your children on their birthday or on festivals? Are your kids going to take you for granted and be able to get what they want all the time?

• Think about money and your parents: Who is going to take care of each set of parents? Whose parents get the priority in terms of financial support, the husband’s or the wife’s? These can often be contentious issues and are best resolved by managing each other’s expectations actively and regularly. Also, parents might continue to support you even after your marriage. You might want not want to make this into a habit.

You must appreciate that they need to plan for their retirement and should not suffer financially because of your dependence, unless you are going to fully fund their twilight years when you are finally financially independent.

• Keep each other up to date and be accountable: What if something happens to you, does the other spouse know all about your financial history and commitments?

Will they be able to survive in your absence? Isn’t love also about making sure that your spouse is not put in any financial difficulty if they are to fend for themselves? You agreed to spend your life together so in the very least you should be accountable to each other for your assets and net worth.

What to do if you are single?

• Don’t eat your money: Single people often spend a lot of their cash on eating out on while on a date with their partner. Most of the money goes on pizza, burgers, drinks and booze. Keep a tab on your spending and don’t incur any credit card debt when it comes to eating out. Just a small saving every week can lead to a large saving at the end of the year.

• Dating debt: Don’t get into debt just because you want to please or impress your partner and shower them with gifts and flowers. Live within your means. Only spend what you can afford. Be creative about where to go out as a couple and doing adventurous things that might not cost a lot of money. How about a museum or historical monument rather than yet another movie and expensive dinner?

• Who pays?: Do you talk about which one of you will pay when you go out? Is it always the male partners’ responsibility or will the female partner also share equally? Understand what each of you can afford and do not make it awkward or embarrassing for either one of you.

• If you are serious about each other, talk about money: If you are thinking of getting married to your girlfriend or boyfriend, have you had a serious discussion about your views on money and your respective habits? Is one of you a saver, is the other person a shopaholic – how will you decide that you are financially compatible?

Have you talked about whether you share the same financial goals and how to achieve them?

• Wedding costs: Have you put some thought into the kind of wedding that you want and who will pay for it? Can you afford the diamond ring that your fiancé really wants, or will you go into debt to buy it – its not just about “colour, cut, clarity and carat”, but also about “cost”? Is going into debt the best way to start your joint life?

What if you told your parents you don’t want a big and expensive wedding but that you would rather take that money and buy a house with it – would that not be a more desirable option for you?

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