Marriages may be made in heaven, but alliances are made on earth. No marriage is the same though the financial principles underlying most successful marriages remain the same. No matter what educational or racial background the couples may belong to, they must first meet to assess each other’s financial standing and their partners’ outlook toward savings and expenditures.
This marriage season, let us look at the following essential factors that will go a long way to make a marriage financially stronger. Remember that you must look at these financial aspects before you decide to tie the knot to avoid squabbles and financial doom in the long run.
Income and spending habits
There is no harm in asking your potential partner how much he or she earns. It underscores their earning power. This also helps you assess their future earning prospects. Understand their primary source or whether they rely on more than one source to earn. These small details mirror their perspectives on income. Spending comes naturally to many while investing requires considerable effort on one’s part. Pay attention to their spending habits to understand if your partner is of the saving kind or is a spendthrift. It serves best to avoid compulsive shopaholics.
Financial goals
Investments are futile if you do not have any financial goals or retirement plans in mind. The honeymoon phase does not last forever. Incidents can turn into accidents overnight. Does your partner have an emergency fund? How much percentage of the earnings does he or she allocate to the fund is an important factor you dare not ignore.
Apart, your partner must be open to discussing retirement and investment goals before marriage. Growing old is mandatory, which is why it is essential to check if people coming together for marriage save enough for their old age. Retirement planning may be different in each case; the key is to remain focused on one’s retirement goals.
Beware of going overboard
It is important to put a check on your partner’s parochial tendency to show off a marriage ceremony as a lavish affair. Indeed, marriage is the most important step that you take toward creating beautiful memories and living a life of bliss with your partner. However, this does not justify some couples going overboard with their wedding expenses. This can be harmful if families take loans to pay off the wedding bills. The first rule of budgeting is to stay within the budget and not pay for anything that you cannot afford within your means.
Do not rely too much on credit
Spending lavishly with your credit card implies that you are starting your married life on the wrong note. This is especially true of people relying too much on Buy Now Pay Later (BNPL) cards that charge too low but can take a major hit on your credit score if not repaid in time. Do not start your marriage with debt. While being completely debt-free requires you to plan your finances like a pro, you must make sure to have the least borrowings in your stride before stepping in to marry. It does not matter if you have borrowed from friends, families or financial institutions. Debt is always heavy and can hamper your marriage in the long run, if not paid attention to at the beginning.
Believe in insurance
Marriage implies a partnership, which means that you both are responsible for each other’s financial well-being in both the near and distant future. Once you have decided to tie the knot, keep all your papers in hand to make the necessary changes, for example, change in nominee or addition to savings accounts or buying a new life insurance policy to secure your partner. If you are planning to move in with your partner to a different place, ensure necessary changes in your financial documents like your address. You might also have to rethink your investments or add your partner’s name to the bank accounts or allow joint access to the locker.
Segregation is the key
Nowadays, both spouses are earning, which means decisions regarding responsibilities for future expenses may lead to inevitable clashes. It is important to maintain individual financial identities while couples must be able to decide who to spend on what. For example, the husband may decide to spend his earnings on household expenses like rent, food, clothing, bills for electricity, water and gas, medical, schooling, and so on. The wife can decide to allocate her earnings to various investment options. Address financial issues jointly, but do not be bogged down by your partner’s traditional approach toward savings and investments. In the end, financial health must induce peace and not unwarranted quarrels and fights regarding possession of assets or discharge of liabilities.
Money matters mandate transparency and that is why you must open up about your financial plans despite maintaining separate accounts and investments. For some couples, privacy is a concern so they do not merge their financial lives totally. Looking back at it in hindsight, this practice has served best for couples, one of whom may have frivolous spending habits. Others may prefer to pool their resources and lead joint lives.
The idea is to know your partner’s outlook toward finances before marriage. This sets the bar for expenses while putting in place a plan regarding finances. The plans must be carefully laid out as both partners may have either dissimilar or overlapping financial goals.
Not all couples are adept at planning their finances. There might be some who may have never gone beyond investing in fixed deposits, endowment plans, etc. In such a scenario, sit and decide to seek a professional advisor who will help in budgeting your financial plans. Not many realize how a personal finance advisor can go a long way in sorting out your finances by simply understanding your financial outlook, earnings, risk appetite and fiscal goals.
You may not be able to chart your financial roadmap for your journey as a couple before marriage. However, taking cues from how your partner behaves with money can help you both from falling into a financial trap after marriage.