Managing Money jointly after marriage
This is for all the kids I know. Some of them are smart, some very smart. However money management is not a part of their curriculum (really sad)…so here are some tips. You can use it or discard it….just my views:
1. Decide only on the big things together: The Rs. 800 T shirt which he bought without asking you should not matter – if the joint CTC is Rs. 15Lakhs! Do not sweat the small things…just let go.
2. Both of you have had very, very different upbringing – so do not thrust your views on the other. As a family we would eat out in expensive restaurants, and take vacations even when I was in school. My wife thinks eating out is a criminal waste of money. Hey view point, that is all, do not crib or scream.
3. When you said yes to her commit morally, physically, ethically and financially. Decide that upto Rs. 1000, (with a cap of Rs. 3000 a month?) you will not fight, and anything above that you will take a joint decision. Saves blushes later on.
4. Start reading subramoney – it is the only site which says ‘you jerk do not blame the regulator, the manufacturer, the distributor TAKE RESPONSIBILITY for your actions – and thus for your financial life…and life in general. TAKE RESPONSIBILITY…
5. Do a SIP in a big fund now. Even if you do not believe in whether SIP will work for you..do it for 5 years, and then tell me ‘IT DID NOT WORK FOR ME’. I hope to be around to answer your question.
6. Balance the financial power – one person keeps accounts, other person handles money. This way both know everything..
7. If you do not know, and you know that your spouse does not know, ASK AN EXPERT – you husband will NEVER ASK..his ego prevents him from letting you know that HE DOES NOT KNOW…LOL
8. Learn, learn, learn – power of compounding, start small, start early, …simple concepts you will find it on this very site!!
9. Accept your imperfectness, and start with a prayer.
10. Read subramoney ….and ask questions!
sg
Amen. Most of the issues my husband and I debate (euphemism!!!!) are related to money and spending. I am a planner, he lives for today. Jab aayega dekha jaayega. Sometimes I think the Lord has a strange sense of humour, matchmaking like this. Or maybe this is His way of ensuring balance in the world
subra
ya SG…imagine walking to a Barista and telling the waiter..’Oh hell all my money is in 30 year bonds…will u take a bond for 2 coffees?’. L O L
subra
I think I had only 9 points! Completely subconsciously, I have repeated point no. 4 as point no. 10!!
Vijay Hegde
Nice article Subra. I do follow 4 and 10 diligently (everyday morning)… 🙂
pravin
its a good point -dont sweat the small stuff.i need to learn that.
T S ASHOK
I need to clear my debts first. The only white elephant i have is my Housing loan EMI..I have planned to clear within 4 years and after that i have planned to start SIP..Am i wrong??( I am 30 and my spouse is 24, house wife.)..
jagbir
Number 4 is gem. My day starts with Subramoney. Thanks a lot!
Raja
Hi Subra,
Let me ask one of my doubts in my personal financial life. Which refers to your posts
http://www.subramoney.com/2008/01/goal-setting-investment-objective-is-a-must/
http://www.subramoney.com/2008/01/financial-goal-setting-is-step-one-in-financial-planning/
One of the things that am not able to understand is the importance given by personal finance literature and experts to set goals and then work towards them.
I struggle to set myself any goals at this stage of my life. I am 33 , married, have a kid (hope to have one more) and earn decent amount. Have a home on loan and the usual amenities that modern life takes for granted. And am not the type who aspires to upgrade his i10 to VW or Merc anytime soon…
I follow a very simple rule which my father had told me when i was a kid. Keep 1/3rd of earning to service debt (ideally taken to acquire assets), 1/3 for future (old age & contingency, wealth building etc etc..i do SIP’s in equity MF of that) and 1/3rd for meeting current expenses. Of course, over next 6-7 years my need to service debt will not exist and hence increase my saving capability.
Now, like most, I too dream of being able to stop working for money some day, have a farm house and relax in the near future. But, that doesn’t mean i can reduce my current expenditure from 30% of income to say 10% and save/invest more aggressively to retire at 45 instead of 55. My current income just doesn’t give me that scope nor do i want to penny pinch now or work for Amway in my free time 🙂 to save for future.
So, coming back to the question, what’s the point of setting goals for a person like me who goes by a framework and really doesn’t feel the need for having any goals.
Can you help ? Is my thought process wrong ?
Regards
Raja
Ganesh
Good Post. I cannot overstress the importance of doing an SIP to my friends who haven’t had the good fortune of realising the power of compounding.
Most of them have done SIPs for a year or two (and most have started when the market was at a high) and now have judged to be a waste of money. I tell them the same thing – Do it for one business cycle (atleast 3 to 5 years) and then make a judgement!
I also like the point on small expenses – what works for us is having a small discretionary budget that each of us can spend on anything one wishes for (useless video games, stupid make up kits, science fiction novels and the kind) and no questions are asked!
subra
Raja,
when I saw you I was very happy…i thought I will ask for one crore for each of my readers…but it turned out that even the dust of the 2G money did not fall on u…so sad!!
to dramatically change the retirement age you may have to change lifestyle – which your family may not be willing. If you have a goal of retiring at 75…so be it go towards that goal, that is all.
If you have a goal, there is a focus to your activity. Some people do not like to have a goal…frankly to each his own….
priya
nice post.but how to motivate the other partner for financial planning.
Ravindra
Hi Subra,
Sorry to say, first point is not 100% true if small things avoided initially and later become habit, may lead to fight mentioned in 3rd point.
If my understanding is correct for first point both needs to be aware of expenses they make.
Raja
Hi Subra,
A. Raja, Raj Rajratnam, Rajesh Gupta… as if the name has been cursed. Thank God, that none of my scams been exposed yet 😉 else donating a few crores here and there is no big deal!
Thanks for the reassuring words. Really, to each his own.
Regards
Raja
M S PANJWANI
“Do a SIP in a big fund now. Even if you do not believe in whether SIP will work for you..do it for 5 years, and then tell me ‘IT DID NOT WORK FOR ME’. I hope to be around to answer your question.”
Dear Subra,
In on of your blog u said u won’t be there after 15 years(forgive me if i am wrong).
How did u arrived at that figure? do have any formula for that calculation-please share with us.
If i am not wrong u r in late forties or early fifties-taking into account the mortality track record of many authors, writers, poets and intellectuals, i think u can bat for another 35 years easily….aamen.
M S PANJWANI
its “in one of your blog”-sorry.
Anindya
Nice Article ..i am not married yet but i am following point 5 diligently for last 1 and a half years..it has not worked out well so far but I am continuing the SIPs..will continue to do so for 5+ years and then catch you :))
Bhawin Jagad
All the above mentioned points are truely simple, crisp and easy to understand by the lay man
Sreekant
@ Raja
As Subra has mentioned, having goals brings focus and purpose to your investment activity. As it is said, you need to know the finish line to win a race (your life in your case).
And another benefit that I perceive is, once you set goals and start putting away money towards these specific purposes, you can benefit from the behavioral bias called “Mental accounting” which is nothing but treating different pots of money differently. Once you have ear marked an investment for a purpose, your conscience wouldn’t allow you to touch it for any other purpose generally.
subra
Raja, Sreekant, and others….
Many people have to create some kind of discipline to save / invest. The real rich do not do SIP – they just keep investing and accumulating wealth. Their income and their expenses have no co-relationship at all. It is the middle class guy who saves/ invests for a particular goal / target. Nothing right or wrong in doing this..just stating it.