Money talks to have before saying ‘I do’

This time around every year, couples try to take the plunge. But money matters often get relegated to the back seat when such life-changing decisions are made. Not discussing financial affairs beforehand can, however, spark fights eventually.

Also, if you have plans to ask someone out, know the few financial aspects you should decide on before you get hitched.

Liability check

Firstly, be sure of each other’s existing financial liabilities. Next, decide on whether you would want to divide the EMI from here on or continue to bear the burden solely. Besides, you can set the tone for your debt preferences going forward. While some may be willing to break the bank for certain experiences, for their money-pinching partners this might seem like a nightmare.

This is where it would be ideal to set goals as a couple. Deciding about the kind of purchases you would want to take on debt for can help avoid conflicts.

Sharing expenses

With financial independence gaining popularity, the question no longer hinges around whether or not to share the expenses. The new-age strife is now more often around how well to split the bills. It would be unjust to divide the bills equally in circumstances where you two earn unequal incomes.

Having an equitable divide in such cases may be more ideal. That is, household expenses can, for instance, be split in proportion to the income of each partner.

Else, you can each pay off certain bills and save the rest for the other partner.

It is also fine if either partner wants to chip in only a certain amount into the household kitty and retain the rest of their income for other personal needs as the case may be.

Coming to a consensus on all of these pain points upfront can keep the two of you away from a lot of unpleasantness later. Whatever your ideal way of splitting the bills is, opening a joint bank account, might come in handy for both of you.

For this, you can continue maintaining your individual bank accounts and transfer (through an auto-sweep facility) only the agreed amounts to the joint account. In this way you can continue to enjoy your financial independence in true letter and spirit.

Also, you must try to set clear boundaries on what expenses would be split among the two of you. This is a smart strategy, which will help keep sore points at bay. in the future.

It would be wise to be open and state clearly one’s choice about financially supporting their family. While one need not seek permission from the other partner for spending on their own family’s needs, it would be wise to not let your couple financial goals take a toll either. Each partner can hence be explicit about the funds they wish to earmark regularly for one’s own family-.

Savings

In most cases, since opposites often attract, couples do not often have the same spending habits. Their economic backgrounds, current level of income and the lifestyle they choose to settle-in for, all play important roles in deciding their saving habits.

It would hence be pragmatic to keep each other in the know of your current spending and saving practices and goals you foresee for the two of you. Asking and sharing your financial goals with your partners also has its benefits. Not only do you get a helping hand by way of extra funds, but you also get to have someone to keep a check on your frivolous spending--- just so you can stick to your financial resolutions better.

Insurance

Another important aspect to enquire upfront would be about your partner’s existing insurance cover. If you take loans, you need to provide for them in case of your absence and also not burden your spouse unnecessarily. Ditto if you plan to raise a family. If either partner does not have an existing life cover, you can consider buying a joint policy. The premium amount is usually lower in joint life plans compared to individuals taking two separate plans, though benefits remain the same under both cases.

You must increase your cover as and when your income levels, liabilities and expenses rise. You can also consider a family floater policy instead of individual health plans.

(This is a free article from the BusinessLine premium Portfolio segment. For more such content, please subscribe to The Hindu BusinessLine online.)