OUR last article on financial independence for Millennial resulted in requests advice to young couples on family finances, wealth creation, and harmonious money-relationships. Money is a major source of marital stress, therefore it must be discussed and planned appropriately. Every intending bride or groom should take financial literacy seriously and invest in her/his financial education.
The first thing couples must discern is what is referred to as “money personality”. What is your money personality? What is your spouse’s? Who is the penny pincher, carefree spendthrift, moderate spender, or numbers-crunching bookkeeper? It is important to realise that each personality has its peculiar strengths and weaknesses and opposite personalities work together to create one perfect personality. Restraint must continually be exercised to avoid the blame game because opposing personalities complement and complete each other.
Couples must discuss their individual financial goals and harmonise them into a joint family goal that everyone (including children) works to achieve. They must also discuss lifestyle choices. Would you be the kind of family that prioritises designer product labels? Would you rather buy the biggest television into your rented apartment or put the money towards buying real estate? When do you hope to transit from tenants to landlords? How essential to your lifestyle is an annual holiday abroad? Would your self-worth be diminished if you fly Economy Class? Lifestyle choices include children’s education. Do you both want only the best and presumably more expensive, or is one of you of the opinion that even children in public schools become doctors? How important is an exclusive education to you?
Then comes the discussion on what is mine, what is yours, and what is ours. How do we determine joint or separate ownership of assets, especially those acquired after the wedding? Do we maintain only one joint account? Or do we have separate accounts but contribute periodically into one joint account? Some wives earn more than their husbands and hide their salaries so as not to till the power balance in the home; my advice is, do what is best in your own circumstances.
Who would manage family finances? Joint management or is the tight-fisted person solely entrusted with this responsibility? Whilst this may seem a good option, think about the arguments that can result from that decision. Such arguments can be avoided by having a mutually agreed monthly budget. But you would have to determine upfront how you would make decisions on extra-budgetary expenses. Also, decisions on investment opportunities and debt – both personal and business debt. It is important to involve your spouse in debts you take in your personal and business capacities, this would enable them provide support and even willingly carry any additional financial burdens.
This brings up the issue of commitment to your spouse’s career. Women who have strong career aspirations must obtain the commitments of their fiancés to their careers, so that they would not be asked to make career sacrifices that could breed bitterness and even divorce. With mutual commitment, creative solutions to family challenges are adopted as against the lazy option of choosing the first culturally biased “solution”.
How about giving to extended family, religious organizations and charities? Monthly cash gifts to parents or church/ mosque should not be shrouded in secrecy, it should be part of your household budget. Additional extra-budgetary expenses should be discussed, and decisions made together. Even if the expense is coming from your individual account, it would help if your spouse is aware as this would enable them to provide additional support and willingly carry any financial burdens that may result from your extra giving. Many of us regularly support siblings and even distant family members, the same principle applies, avoid secrecy. Friends and extended family members must be made to realize that your family has just one purse. Children must be exposed to financial literacy from an early age, so they would understand your decisions and support you in achieving your goals.
Investment decisions should be made jointly, and assets acquired in both names. This implies that both of you have adequate financial education on the various investment vehicles and how they meet your family’s financial goals. Sometimes, this may not be feasible; if for instance an employer lends its staff money to buy an asset, it is unlikely they would permit a joint ownership of that asset. So long as the decision to take the loan from the employer is discussed upfront, your spouse should understand that the asset would increase the family wealth.
Transparency is a key to marital bliss, therefore as much as possible practice openness even in financial matters. Happy Investing,
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