If you are a newly-married couple and want to strengthen your marital partnership by managing your finances jointly then it is, certainly, not a bad idea. But it is incumbent upon your approach towards savings and investments. If you are a conservative investor while your spouse likes to take big risks then handling finances together may not be a sustainable proposition. On the other hand, if one of you is comfortable with letting the other call the shots, then the partnership can be more long-lasting and harmonious.
“What differentiates a marital partnership from others is that in this case, the welfare of one is inextricably tied to that of the other. They cannot afford to have different investment goals. So, more often than not, it is a good idea to take investment decisions jointly,” says Deepak Kumar Aggarwal, a Delhi-based financial advisor and chartered accountant.
However, when you decide to manage your finances together, make sure to follow some key rules:
1. Clear your high interest loans early: At the outset, pay your high interest loans as soon as possible. If you have high credit card loans for which you are paying an interest in the range of 14-15 percent, then you must pay this loan before making a big purchase later.
2. Careful about the big purchases: When you make a big purchase such as a car or property, think twice and make sure that both of you are comfortable with the decision. If an asset has a life of 10 years then it should not become a bone of contention between the two soon after purchasing it.
3. Invest early in your career: Although there is a tendency to over spend early in the career on travel and luxuries, it is a good idea to inculcate the habit of saving considerably early in the career. As they say old habits die hard – the sooner you start saving, the better it is.
4. Keep your spouse in the loop: There is nothing wrong in having separate portfolios, as long as you keep your spouse informed about the investments. The individual decision making relating to investments must be respected. But keeping your partner in the loop will help strengthen your partnership.
5. Identify goals: Early in your career, you should identify your long-term goals such as buying property, vacation abroad, buying an SUV etc. Afterwards, you can invest regularly to achieve those goals well in time. When both of you are on the same page relating to your career and life goals, it is easier and faster to achieve them. It only requires planning and disciplined investments.
6. Determine your risk appetite: You should know the extent of your risk tolerance before you take risky bets. If you are willing to take big risks, you must have access to emergency funds in case the bet does not pay off. And importantly, you must keep your spouse in confidence.
So, if you want to strengthen your marital partnership by making joint investments, then make sure you don’t disagree on fundamental aspects of personal finance. And even if you manage some part of your portfolios independently, at least, keep your partner informed about the key investments you make.