Home >Money >Calculators >Husband, wife and the love for money

They say opposites attract. While this may be true in the case of personalities and interests, it could go terribly wrong in financial matters. It’s important for a couple to be standing on the same plane, at least in critical financial matters. In fact, financial spats are one of the main reasons now behind couples drifting apart. “In today’s times, when both men and women earn, each one feels financially independent. So, it’s possible for couples to have differences in opinion when both share the financial responsibility. Financial incompatibility is one of the main reasons why couples drift apart these days. When there is financial incompatibility, the level of understanding and adjustment drops," said Dr Anjali Chhabria, founder of Mind Temple, a counselling centre that caters to psychiatric, emotional and behavioural concerns in individuals.

This also applies to single-income households. “Even in couples where only one partner is handling the finances, we see financial incompatibility as both may think differently about savings, expenses and investments. Till the point these are simply discussions and not the reason for constant conflicts, it is healthy. When couples stop understanding and respecting each other’s opinions and doubt the partner’s intentions is when the problems begin," added Chhabria.

So what should you do if you are at loggerheads with your spouse in financial matters? We give you a few tips that should help you overcome financial tiffs with your spouse. Read on.

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As with any other disagreement, the first step at making amends even in financial matters starts with communication. You need to convey your approach towards money and have full disclosures of your finances. “Whether major or minor, nearly everyone has a disconnect when it comes to the dynamics of money management. Most often, this stems from non-transparency in their financial lives in the context of what money means to them," said Deepali Sen, a Mumbai-based financial planner. “For instance, I know a couple who spent lavishly on a house because the wife wanted a high society residence. But now the husband is finding it very difficult to service the loan instalments since he has erratic business income and it’s a single income household. Even though he is exploring his options, he doesn’t want his spouse to know and get stressed," added Sen.

Even if the idea is to protect the partner from worrying, by not involving your spouse in financial matters, you may be committing a mistake. “It creates unrealistic expectations when one is left in the dark and it leads to disagreements eventually. For instance, in the case of one couple, the husband has made heavy investments in whole life insurance policies that will mature when they are around 80 years old. Since most of his money goes into illiquid investments, the wife complains that despite a huge take-home package, there is little money to spend," said Sen.

It helps if the couple knows the exact financial situation of the household. This can be done if you involve each other in all financial decisions.

Define goals

But when both have opposite approaches to money, how to discuss and decide? You like equity but your spouse won’t go beyond fixed deposits. Or, you want to spend lavishly on your child’s wedding, but your spouse wants to keep it low key. One way to iron out such differences is to set goals.

“A financial plan helps put things in perspective. It’s only when you visualize your goals that you are willing to set aside differences and work towards the common goal. Through a financial plan I can explain the merits or demerits of a certain financial product in relation to the financial goals," said Kartik Jhaveri, a Mumbai-based financial planner.

What also helps is keeping an open mind. “People should try and educate themselves or seek advice of experts to understand financial products. Doing so helps in opening up the mind. But what really prepares a person to step beyond risk level is when goals are spelled out and we show the path to achieve those goals," said Surya Bhatia, a Delhi-based financial planner.

Make finance a joint affair

The importance of working as a team can’t be stressed on enough. It’s important for you to think of yourself as one household rather than two individuals, in terms of financial decisions. “A couple must perceive finance as a joint affair and not differentiate between themselves by calling it ‘my money’ and ‘your money’. It’s important to respect each other regardless of the income that one brings in, and take all financial decisions consulting each other," said Chhabria.

Most financial planners suggest that a couple should keep joint accounts so that your money is used for a household as opposed to individuals, and you are aware of each other’s expenses.

“I always recommend that a couple should have two joint accounts. One spouse should be the primary account holder in one account and the secondary account holder in another. Two accounts will help you manage your respective salaries, personal expenses and file tax returns, even as the joint ownership helps you understand who spends how much and on what," said Jhaveri.

A joint account works on the principle of either or survivor, which means if one dies the survivor owns the account automatically. A joint account is a better way to manage money, plus, in the absence of your spouse, such an account means expenses and cash flow are not abruptly hampered.

But working as a team doesn’t stop with joint accounts. Your savings and spending should also be made jointly rather than individually.

“We have come across many cases where one spouse does all the spending but suddenly, when the going gets tough, realizes she has no assets in her name," added Jhaveri. To avoid such rude shocks, your spending and investments should be proportionate to your income.

“Spending and saving should be proportionate to the income. So, if you earn, say, 100 and your spouse 200, your portion should be one-third whereas your spouse’s should be two-thirds. In addition to this, make investments in both your names," said Jhaveri.

Financial squabbles are increasingly getting common in marriages and these can snowball into irreconcilable differences. Therefore, it’s important to let your spouse in on all financial matters and treat your finances as one for the household rather than individuals.

And, yes, whether married or single, the basics don’t change. Have financial goals so that you don’t go wrong with products and have a better understanding of how to manage money.

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