Marriage and Money!
Most people get married because they are in love. Well that is not such a bad thing, I feel. However along with their thoughts, their finances too get married – and ha that is tough for some people to handle.
Unlike the Americans we do not do pre-nuptial agreements, but unlike Americans we do not require lawyers for everything that we do. Things are of course going to change – we are producing just too many lawyers….and they will require business…soon!!
Marrying of finances is like attending a class of ‘pilates’ or yoga. It is really very easy to watch. The problem is in the doing, not in the seeing!
What are the things that a newly married couple should talk about / consider even before they plan a serious courtship blooms?
Well here is a small list – it can never be exhaustive, because it is always evolving!
1. If both of you have independent incomes there is no clubbing provisions (unlike in US) nor is there any need/scope for joint filing.
2. If the ‘husband’ is planning to gift something to the wife so that she can earn INTEREST from that money (or rent from that property) that gift should be made BEFORE the marriage. No clubbing can take place if the gift is made to a girl friend. Hey be careful that she does not take the gift and run away!
3. Make sure that both of you have adequate medical and life insurance. If your company has medical insurance, make sure you enter your spouse’s name, age, etc. so that medical cover can start as soon as possible.
4. Make sure that all the nominees are in the correct names. If you think you want to see how your wife behaves (over say 6 months)! But it should be a REASONED action, not a lack of action.
5. Discussing finances like – joint accounts, who will bear what expenses, any past loans – including marriage loans, credit card usage, savings / investment habits.
6. Spending habits – will you pay credit card bills in full? Or will you take it partially?
7. If our parents / siblings require money will we give? How much?
8. If our friends ask us for money will we give? How much?
9. Can we please sit and agree on some short term (car, white goods) long term goals (kids, house – buy or rent), and very long term goals (retirement)
10. If our objectives are different (bigger house vs Europe Holiday) how will we reconcile the two.
11. Who will pay the bills – financially and physically!
12. Budgeting…eeekkk! ‘mhanje kay?’ or ‘yes I believe that we should work with a proper budget…
13. How much income you need to run the house, level of affluence that we wish to attain, money to be spent on hobbies, travel, leisure, luxury clothes, when to retire, …and the conflicts between the goals.
14. Will we ever go to our parents for money? Why and why not?
15. It might be difficult to talk about divorce – but keeping records of assets purchased, vacations paid for,…etc. is really useful…in case of a fight.
bemoneyaware
I doubt if any couple discuss so much about finances. Mostly husband looks after finances and wife takes care of the household and all other stuff.
Just wondering How much finance do you discuss with your wife?
Imtiaz
Very practical advise. Ours was a love marriage (18years now of knowing each other and 9 years of marriage) and somehow I feel having scheduled discussions and review of the financial situation goes a long way in ensuring achievement of goals. It’s like individually you may know where you are but as a team you need to pool resources (of the head) and prioritize. Once a fortnight it is important to take stock of finances, set/review goals for the short, medium term and ensure you’re ontrack with the long term ones (retirement funds)….. it is especially important when you are freelancers/business folk…. also identify the maths wizerd at home and let her manage the books (in our case the missus)…. no sharam in that at all….
as far as girlfriend/wife (or even boyfriend/husband) running away with your assets…. my advise to people who’re worried about that part “better your money than your lifetime of trust and love” (you’re probably better off being rid of such a person than spend a lifetime with them and then realize at the end that it was all for the money)….. so trust freely and forgive short sighted gold diggers for they know not what is more important in life….
Pooja R
bemoneyaware you actually run a blog and u are asking such a basic thing!! Financial bloggers themselves need a lot of financial literacy program I guess. I work for a bank and come to this blog for my dose of financial learning…Subra sir please keep up the good work. I showed my husband this post and he said ‘we discussed this in the office today’. Thank u sir…
bemoneyaware
Pooja subramoney blog is a great work. And yes everyone needs financial learning (blogger or non blogger. FYI bemoneyaware is run by women blogger of non financial background)
What I am asking is how many of husband wife sit down to discuss their finances. I recently came across a couple planning to get married , both earning good amount where they say your earning is your money , you spend it the way you want. My earning is my money. I spend the way I want.
Another couple I met just wanted to enjoy the golden period of life till kids come.
And when husband is only sole member how much information/discussion/decisions would he be passing to his wife.
Paramjeet
Pooja and be money aware…anecdotal examples do not really help. There are many, many couples who brilliantly manage their money. They both know what investments, what insurance, etc. etc.
However, having said that there are OBVIOUSLY many many more who do not do it. This is just an agenda of what HAS to be done. How many do it is not the question. How many should do it is the question.
Imagine 100 couples start doing this because of this post, that is an awesome impact. How does it matter to us whether Subra does it or no? That is his PERSONAL problem is it not? Take the gyan, ignore who is giving it….like Buddha said…
subra
ha enjoying the sawaal jawaab – no interference needed i presume?
Bhushan
On Item #2, to avoid clubbing of income (and avoiding paying tax on the interest earned there), if you are gifting money before wedding, then you will end up paying gift tax. You choose which tax to avoid.
shaq
we decided an simple plan, ,
1.My salary will go into all the expenses, loans, etc which will decide our standard of living. My wife salary will be used for savings, investment and retirement plan.
2. all loans took priority over savings to be paid off as soon as possible
3. in case of a the marriage dint not work out we split the savings 50-50
4. our ancestral property remained with person itself to decide what they wish to do.
5. additionally we maintained seperatly accounts for saving small amounts after the above for our own decisions.
Seven years till date its has worked like magic.
arvind
> Unlike the Americans we do not do pre-nuptial agreements
We do not do or we cannot do? I mean a pre-nup is legal in India? What can it cover? Considering an arranged marriage where, in most circumstances, a guy is chosen solely for his income, how can that guy can make sure he is not ripped off when the marriage is over? How is it different when the girl is earning and when is not? Does it matter how much she earning?
Can a pre-nup prevent sharing of ancestral property and wealth earned before marriage? Does the contribution of girl taken into account when deciding alimony or settlement? Does it matter why divorce took place – whether it was the fault of either spouse – infidelity, cruelty etc?
priya
i want to know how much salary one should earn for 4 people staying in Ahmadabad?