Whether it is a love marriage or an arranged marriage, there will always be money issues to handle. It is surely not easy, and not a topic which people talk. I am seeing girls with prima facie better qualifications in the job market getting married to guys with not too great a future. Sure they are together now, will it last? Personal finance are some of the difficult topics for people to discuss. But since financial issues quite often cause problems in marriages, you should try to reach some sort of consensus on your finances before you tie the knot. I am writing this article as a pointer – so if you know somebody who is planning to get married soon or has been recently married, you could mail / wassup this article to them.

http://www.subramoney.com/2014/03/marriage-be-careful-boys-and-girls/

Some items to consider include:

Where do you want to be a few years from now?

Our dreams are now joint dreams and dreams come with price tags. If one spouse wants to continue his/her education or start a business, or start a family, significant sums may be needed for that goal. If children are part of your plans, when you have those children, will have a significant impact on your finances. You are much better off talking about that NOW.

What assets and liabilities do you have now?

If both of you are very young, you may not have too many assets. However, if you are slightly older you may have acquired residential property, mutual funds, insurance, vehicles, etc. – create a combined net worth statement. You will know where you stand – and you may have to take some action. Say you are shifting from Pune to Delhi, you may have to sell your property in Pune and buy in Delhi. It is the starting point for determining how you can achieve your financial goals. If one or both of you have significant assets, you might want to know how to handle the marriage coming off. How will you share the assets, or why even share. Do you need to consider an agreement to keep the assets separate for a few years? For a second or third marriage, especially if there are children from any of these prior marriages, a lot of planning with the help of a lawyer is essential.

How will you handle loans and gifts?

When a friend, parent or sibling ask you for a loan, how will you handle it? Will you give unquestioningly? will one person give without consulting? will the other spouse know about the loan? what will be the cut off? If the requirement is for a big amount, will you do some paper work? Ditto for gifting.

Do either of you have credit problems and what is your attitude to credit?

When you apply jointly for credit, both of your credit histories will be evaluated – say you are applying for a home loan. So the poor history of one of you will hurt the rate at which you will be allowed to borrow.  If one of you has credit problems, work hard during the early years of your marriage to correct those problems before you go for a big loan like a housing loan. Check out your personalities too – do both of you like to take credit for everything or are you different? Some men prefer taking a loan, while some men like to invest in a bank recurring deposit to see how comfortable they are setting aside an X amount on a regular basis – to see their ability to repay a loan. Some people do not like to take loans for assets which depreciate. So a car will be self funded, but a house will be bought with a mortgage.

Should you combine your finances or keep them separate? Separate for how long?

Some couples prefer pooling all funds, some like to keep it separate. Does it create a feeling of unity? Yes. However, the stats may trouble you – in the past 5 years (according to police records) more than 2 million marriages in India have had a single focus of ‘spouse financial cheating’. So take your time to decide when to lose your financial autonomy, especially if you are both a little older – say in your 30s. This is not an either/or decision. You can set up a joint account for shared expenses and shared investments, with each spouse contributing a predesignated amount to the account. Remember good account keeping is necessary for the Income tax purposes also – both of you have to maintain the accounting details of EMI paid..etc. For the balance funds, separate accounts can be kept for discretionary spending. Take your pick, do not assume.

How will you handle spending / Investing decisions?

The process of defining goals and setting a budget can help resolve differing views about money matters. However I do not see enough number of couple wanting to compromise and make joint decisions about how money will be spent. Two separate people living together is very different from 2 people planning to be a family. Budgeting and talking about money seems like a painful process, but addressing these issues soon can help prevent future misunderstandings. I have seen a girl suffer when her husband closed all her SIPs and invest all that money in a property which were in the name of the boy’s mother and the boy’s wife. She did not like it one bit, but thought it was too small to walk out of a marriage. She still feels (happened 5 years ago) that her SIP in equity funds could have given her far superior returns. If you both have medical insurance through your employers, YOU may still need some medical insurance to be taken in your individual capacity – what if you got pregnant and quit your job? or decided to go off on your own? or your husband took 3 months off to be with his ailing parents? You may even want to evaluate your life insurance. Think of involving your parents too in the medical and life insurance discussions and decisions.

Who will handle investments, documentation and financial tasks?

Decide who will handle investments, insurance, documentation and other financial tasks like filing income tax returns. Today it is possible to automate savings, premium payment, etc. However, there is a lot of documentation that is required to be done for filing your tax returns. One person may be more suited for these tasks due to their qualification, background, personality or time availability. However, the other spouse should not give up total control. If the husband handles all the financial matters, the wife should once in a while redeem some fund, invest some fund, etc. One day when you are alone, the skills will be useful and you will feel happy that you KNEW how the whole process worked. Set up a formal time, to go over financial matters. This keeps both spouses informed, and up to date on the operational issues. This way both of you know the passwords, and also a designated time to discuss spending or items of concern.

Sorry could not make it shorter…all the best.

http://www.subramoney.com/2014/03/marriage-be-careful-boys-and-girls/

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