Marriages create a special bond between two persons which are already decided in heaven. This special bond sustains on variety of factors of which trust is the most fundamental. Several responsibilities fall on the shoulders of each partner including the financial management responsibilities. Therefore, in this article, we present to you important aspects of financial management couples should know.
Important Aspects of Financial Management Couples Should Know | The risk tolerance level differs between each spouse in a relationship
There can be a situation where the husband is more willing to take risks for greater returns. On the other hand, the wife’s a risk-averse person. If one of them tries to dominate the other in terms of choosing the best investment type then it can cause indifferences in the relationship. Hence, it must be handled in a careful manner. The best way is to allocate one part of wealth as per the husband’s risk appetite and the other part as per the wife’s risk tolerance level. The major riskier assets will lie with the husband. And the safe assets with low risk levels will lie with the wife. In this way, both feel satisfied and happy.
Important Aspects of Financial Management Couples Should Know | Each partner should bear expenses in a proportionate manner
When each partner decides to bear expenses in a proportionate manner, it nullifies the clash of opinions in terms of one taking all investment decisions while the other only keeping a check on the expenses. Such clash of opinions can deteriorate a relationship. Hence, bearing expenses in a proportionate manner is the key. For example, husband earns one lakh per month and wife earns fifty thousand per month. In this case, two-third of expenses and one-third of expense can be borne by husband & wife respectively.
Important Aspects of Financial Management Couples Should Know | Create joint as well as separate accounts
Joint accounts prove to be beneficial to maintain and transfer certain amount for expenses by each partner. However, separate accounts are better from the income tax perspective. Therefore, maintain joint as well as separate accounts for different objectives. Separate accounts will cause you less tax amount and the investments done in each account will greatly help during uncertainties. However, it’s important to clearly state the source of investments for each partner to avoid any troubles from the income tax department.
Important Aspects of Financial Management Couples Should Know | Ensure that both partners are insured along with their children
It’s important to ensure that both the partners are insured along with their children. This is crucial to secure the family especially when the income earner passes away. Otherwise, if one of the partners such as the wife does not have a sufficient insurancethen it will create lot of troubles in terms of managing their finances, children education and so on. Hence, the insurance must give a sufficient cover to bear all the family expenses. It should be such that the wife and children are secured and children can pursue their education without any problem till they reach their adulthood.
Important Aspects of Financial Management Couples Should Know | Gain all the knowledge and then invest
It’s important to gain all the necessary knowledge regarding the investment options and then invest. Both partners must show equal interest in the financial matters. Women especially must also focus on the financial matters along with their other tasks. This will only protect them against all odds especially during separation. Imagine, the wife did not concentrate towards financial matters such as investments for herself and children, check that the investments are also done in her name & similar things. During hard times like sudden demise of husband or separation it will create a financial havoc on the wife!
Hence, it’s necessary for both the partners to be prudent in financial management. Trust is the basis of any relationship. However, it’s always better to safeguard yourself and review your financials regularly as you never know what may happen in future. The old adage holds true here also-Prevention is always better than cure!