CAN MONEY HURT YOUR MARRIAGE?
It may not be a four-letter word, but evokes as extreme a sentiment. So while L-O-V-E makes the world go round, it faces stiff competition from a five-letter word called M-O-N-E-Y.It is wooed and worshipped and, the lack of it feared by all. When combined with a complex concoction called ‘marriage’, the mix can be incendiary. Little wonder then that marriage and money bring out the worst in some couples.
According to a US study ‘Examining the Relationship Between Financial Issues and Divorce’, arguments about money are considered the ‘top predictor of divorce’. PV Subramanyam agrees. “Not having premarital discussions on finance can easily lead to divorce because of the mismatch in money personalities,” says the financial expert and CEO of Subramoney.com. These personality traits are typically founded in our growing years and inherited from our families’ money habits. This is why it’s as essential to find common ground in financial temperaments as it is in other aspects before tying the knot. Here we offer a road map for doing so.
Do you talk about your finances?
Communication is the holy grail that can deliver many a marriage from disintegration. Subramanyam swears by it, pinning most of the ills on refusal to talk about money before marriage. Financial planner Jayant Pai reiterates: “It’s a subject most people avoid discussing till it’s too late.” However, more and more people are learning the benefits of talking. The periodicity of discussion may vary: some couples do it once a month, others once a week, and yet others on a need basis. Some like Jaipurbased Jitin Bhatia do it even before marriage. “We had talked about our salary, debt and other things. We decided that we would pay off all our liabilities within a year, and we did,” says the 34-year-old who has been married for seven years.
Before marriage, talk about everything, be it your income or expenses, savings or debts, liabilities or assets, proclivities or aversions, habits or cravings.
List out your outstanding debts and assets. Most importantly, talk about your attitude towards money, your values, and what you plan to do after marriage. After tying the knot, the one way of avoiding fights is to keep the goals in sight and iron out personal differences while analysing them on a regular basis.
Is only one partner handling finances?
If discussion is important, execution is critical. The dangers of one partner doing it all are two-pronged. One, in case of the unfortunate demise of a partner, the other is left in the lurch. Two, the spouse who manages money ends up dictating terms to the other, a big reason for clashes and arguments.
It doesn’t really matter who plans and handles the money as long as both partners remain in the loop. Pranav and Palak of Ahmedabad have found a good balance: while Pranav takes care of equity investments and bill payments, Palak looks after debt component and household expenses. If division is such that one person is making all investments, or inadequate financial savviness hampers the distribution of work, it is important that the partner be kept well-informed.
Have you merged your money?
This is another issue that raises tempers and needs to be settled at the outset. It should ideally be preceded by a frank discussion on your financial status before marriage. The factors that decide this issue are the alignment of your financial habits and, more importantly, how much you trust your partner. “If there is no discussion on it before marriage, it is best not to rush into combining finances immediately after tying the knot and should be done after six months or one year,” says Subramanyam.
For most people, a good way to avoid fights over spending is to have a joint account for combined expenses, and separate accounts for individual, discretionary expenses. However, there is no right answer to this dilemma and, depending on the strategy that works well for you, you can either keep your money separate or combine it.
Repayment of existing debt can also be a big friction point for the couple. Ideally, the loans taken before marriage should be settled by the respective partners, while co-owned assets should invite joint loans. If, however, there is a good understanding, you can decide your own mode of merger.
Does one partner have all the debt?
While debt may not seem like a big enough cause for marital confrontation, it can turn into one. If one partner takes up the responsibility of borrowing and repaying the loan, while the other manages household expenses, the former manages to build an asset and the latter is left with nothing. In case of a separation, this can pose problems. Even though law empowers women to be part owners of property bought during marriage, irrespective of who pays for it, it is not true of other assets and can lead to a bitter conflict.
The other reason to split debts, be it a bank loan or credit card, is that it helps build credit score. Without a good repayment history, one may not qualify for loans even if one wants to at a later stage. So try to have independent credit cards instead of add-ons to your spouse’s card. “If the partner blows up the entire amount, it may affect your credit score,” says Pai. Not to mention the fact that you will be left to pay the entire bill in case of a separation. It is also the simplest way to keep both the spouses accountable. This is because in case of a divorce or default in payment by one partner, the other will continue to be liable to repay the amount.
Do you have conflicting habits?
Financial personalities are conditioned primarily by our parents’ monetary habits. Being at odds with your spouse’s habits — be it extravagant spending or taking risk — can draw a deep wedge in the marriage. This is why it is essential to understand your spouse’s financial attitudes before marriage. “If you don’t already know a person before marriage and meet through a matrimonial site, pay attention to visual cues, besides talking in detail. If a person insists on meeting in a 5-star hotel or wears branded stuff even though he doesn’t claim a big salary, be on the alert,” cautions Pai.
As for minor differences over spending and investment choices, it’s best to tide over them as long as you stick to a budget and asset allocation, and are on track to meet your goals. If, however, there are fissures that seem unbridgeable, consult a financial planner.
It is not easy to balance money and marriage at the best of times.If you answered in affirmative to any of the above questions, you need to make a few changes in attitudes to ensure the sustenance of marriage. Make your choice.
Before you marry…
…ask these questions:
Do you track savings and spending? This will tell you whether your spouse is planned and serious about money. Will we combine or keep our debts separate? Do not take on too much of a partner’s debt unless it’s an asset that you jointly own.Is your family financially dependent on you? How will you take care of them?
To avoid arguments later, it’s best to talk about it now.Will we combine our money after marriage or keep it separate? If you don’t know your partner well, wait for six months before deciding.How will we divide financial responsibility like paying bills and investments after marriage? The division of labour will again have to be discussed and ideally split according to one’s calibre.
…get this information:
Accounts and passwords: You should be aware of all the account numbers, including savings banks, PF, PPF, demat, credit cards, mutual funds, insurance policies and tax details. Ensure access to password of online accounts.
Investment portfolio: You should know about all the investments made in your or your spouse’s name so that you can balance, redeem and make further investments.
Insurance policies: Information about all types of insurance is critical to making claims or withdrawing money on maturity. You should also know about the due dates for premium payment to avoid the lapsing of policies.
Will, estate planning: Having access to will and property is essential for smooth transition of all assets. Keep all vital documents in a safe deposit or locker, or store them online.
If you separate…
…take this action:
Change nominee details: Since the spouse is typically the nominee in all investments, change the nomination details in PF, PPF, bank account, demat account, mutual funds and insurance policies.
Block credit cards: In case of add-on or supplementary cards, block immediately to prevent the spouse from withdrawing all the money or making purchases.
Close joint accounts: If you have a joint savings account, the spouse can take out all the money, irrespective of who deposits it. Foreclose FDs and other joint investments.
Terminate ecs for emis: In case of joint purchase of assets and loans taken for these, instruct the bank to stop the EMIs.
Alter your will: If you have a will, alter the beneficiary.
Credit – TOI