There are many things a couple can do to ensure that money matters do not contribute to marital discord.
Managing investments and expenses
In cases where both husband and wife are working, usually one person spends, while the other invests. In this case, all investments will be made by that person only, which can create discord.
In unfortunate situations where the couple decides to part ways, this skewed investment pattern becomes a bone of contention. The person who has invested can claim the money invested, which is completely unjust to the other person.
The best way to tackle this is to spend and invest in the same proportion as the income. Let us illustrate this with an example. If A is earning ₹1 lakh and the spouse is earning ₹50,000 and their spending is ₹50,000 (which is one-third of the total income), A should shoulder two-third of the expenses, and the spouse one-third. The rest should be invested with the other spouse being a joint investment holder or nominee. This will be a fair arrangement.
While spending, there can either be a clear bifurcation of what each spouse will spend on, or there can be a joint account into which the expense amount is transferred and is spent from that account only.
Also Read: Best of both worlds: How couples can plan taxes to make the most of old and new regimes
Money fidelity
It is best for couples to be honest about money matters right from the start. It is imperative to discuss spending that may be contentious if not disclosed. For instance, any monetary assistance to parents/ relatives/ friends and the extent of it should be clearly discussed, as concealing this can cause friction and rifts.
Ideally, there should be no secrets. If there are spending, the other person may not approve of, it is best to agree to have a “black box” discretionary spending amount, which the spouse will not question.
This is a halfway house where the spouse does not know the exact nature of the spending but knows that it is limited to a certain amount, which would be a relief.
While there can be misgivings about such non-disclosed expenses, it is way better than when it is a secret and not disclosed. Many times, such expenses can be indulgences like pubbing, partying with friends, helping friends and family, philanthropy etc., and not necessarily something sinister!
Money chat before marriage
It is important to align on money-related matters before a couple ties the knot. It is good to know the assets, liabilities, earnings, spending habits, etc., to know where each one stands. Then they can discuss when and what goals they would have and how they will achieve the goals.
They may also decide on any family assistance, discretionary spending, investments, probable expenses, etc. A level of understanding of financial matters will lay the ground for a smooth life ahead.
Also Read: Four questions retired couples should ask themselves about their finances—today
Expectation management in families
It would be a good idea to clearly delineate where the family will spend, invest etc. Important goals should be discussed in the context of the family finances.
Discussing finances is not done enough in many households, with the result that family members are in the dark regarding the real financial position. If the family members are aware of the true financial position, they will be willing to adjust their spending and expectations on that basis.
Even the decisions on goals like children’s education, home/ vehicle purchase, etc. will turn out to be more realistic and manageable if the family members are aware of the correct position.
Also Read: Mint Money | Should married couples merge finances or keep them separate?
Money to the non-earning spouse
Just like a salary, an appropriate amount should be made available every month to a homemaker. This takes away the awkwardness of asking for money for her personal and discretionary expenses. This simple act can be liberating and can greatly contribute to amity in the family.
Beyond that, it is good to anticipate and fulfil the family’s wishes, within the bounds of prudential money management. Ordering a treat at home or taking them out to a movie once in a while will signal that being prudent with money can serve up pleasant surprises as well!
Finances are an important part of life. Getting that right, having the right expectations about money and also from each other regarding money, is the foundation on which a good marriage rests. If the finances are on a solid foundation, the union is that much stronger!
The author is the MD and principal officer at Ladder7 Wealth Planners and the author of “If God Was Your Financial Planner.