Valentine’s Day and talking about financial planning at the same time doesn’t sound very romantic. I know what you're thinking: Who talks about money on Valentine’s Day?
There's a real good reason to talk about financial matters on this day.
Money matters are one of the prime reasons for stress in relationships and marriage and the reasons couples break up.
Many arguments start when one feels the other is spending too much money. Another area of conflict is when one partner feels controlled by the other with respect to spending money. There is no one right way to handle cash; the trick is to find the way that works in your marriage.
Having a heart-to-heart chat about money can help you avoid serious conflicts in your relationship and can keep that romance alive. Communication about money and effective planning as a couple will help you and your partner share many happy years together. The more effectively you can communicate and plan for your future finances, the better it is.
Discuss and design effective ways to handle cash and spending together.
The first step in developing a healthy money relationship with your partner is to come clean with all things financial, instead of hiding money secrets. Money secrets will drive a huge wedge in your relationship. It’s like having a financial affair.
Answer the following questions frankly and you will know where you stand in your financial relationship with your partner.
Do you make purchases and hide them from your partner?
Do you pay cash so he/she won’t know what you spend money on?
Do you have debt or bad investments that you are hiding?
Do you pay cash so he/she won’t know what you spend money on?
Do you have debt or bad investments that you are hiding?
Do you share your credit score?
Does your spouse know what to do and whom to contact in case of a financial emergency?
Don’t ignore the money talk. The most essential step in smart planning is to open the lines of communication. To start the discussion, ask open ended, probing questions. Make sure you share your answers to these questions, too. You’ll gain an understanding of each other’s values about money.
Set up a regular meeting to talk about family finances. Planning your future lives together can be one of the most meaningful and important steps you can take as a couple to create a happy financial relationship.
Here are some items you need to discuss:
1. Do You Have Debt Issues?
This doesn't have to be turn-off, particularly if you're responsible about debt repayments.
Take a hard, honest look at what you owe. Set a goal to reduce your debt load in the next few years. That might mean reducing impulse shopping, cancelling the holiday or delaying the purchase of a car or other assets. When you face temptation, delay the purchase and give yourself time to consider whether it’s a wise move that fits within your budget.
2. Have you decided your Financial Goals?
Planning your future lives together can be one of the most meaningful and important steps you can take as a couple to create a happy financial relationship. Here are some questions to think about when you set financial goals together:
Have you shared your income details and made a Budget?
Have you discussed where you want to be financially in 5 years, 10 years and 20 years?
Have you planned for your retirement, where do you want to settle, how much money would you require per month at present cost?
Have you discussed the funding of your children’s education?
What do you and your partner want for yourselves, your family and your community?
What do you and your partner want for yourselves, your family and your community?
What is the financial impact of these goals? For example, if you desire to travel to Europe in 3 years, how will you save for this goal?
Have you agreed upon a savings and investment strategy?
Have you agreed upon a savings and investment strategy?
3. Do you have a Contingency Fund?
Have you savedenough to cover at least six-month expenses in case of any emergency, safely parked in a liquid fund, which is readily available to meet any contingency?
4. Are you adequately insured?
Insurance helps us in times we cannot help ourselves.
The first part of insurance is health Insurance, a family floater covering all aspects of treatment and cashless medical care is a must.
Next ask yourselves, “Do I have people who need to protect financially and how much money will my spouse and dependents require to meet monthly expenses, pay off all debts and meet the financial goals?”
Ideally, take an insurance cover for 10-15 years expense, factor in inflation, add the mandatory financial goals like children’s education and any debt or liabilities that you may have.
Sit down with your spouse and get this most important aspect covered before you plan your night out.
5. Are you Saving and investing Enough?
The best savings plan is automatic. Have money withdrawn from your checking account every month. Are you following the 50/30/20 rule for financial planning and expenses.
Check out our earlier blog( https://sahayakgurukul.blogspot.com/2019/02/saving-vs-investment-choose-wisely.html)
Not all savings lead to investment. Understand the difference between the two and choose wisely to achieve your financial goals.
6. Are You Having Regular Money Talks?
Most couples spend more time discussing restaurant choices than money matters. Seeing where you're at on saving and spending should be a regular activity.
Go over monthly bills with your spouse, review your portfolio at the end of the year and discuss your achievement vis-a-vis your goals.
I know couples that communicate about their finances via email or Whatsapp. It works best for them to each take the time to put their thoughts in writing and then allow their partner to review and respond at a time that’s convenient. Other folks like to sit down over dinner or chat while taking a walk. There’s no correct venue for these conversations, they just need to happen.
7. Have you planned your nomination, legal heirs and created a will?
The loss of a family member is one of the life‘s most stressful events particularly in case of a sudden and unexpected death. Coping with the emotional aspect becomes more acute in case of financial stress and uncertainty.
I can share countless cases with you, where the sudden demise of a partner left the other partner totally lost in terms of their financial status and what to do next. There are numerous cases of life partners stuck in illiquid assets, legal issues, and in “cash poor” situation despite being “asset rich ” finding it difficult to even meet their monthly expenses.
This not only leads to uncertainty and legal complications, but at times, also to distress sale of assets at highly discounted rates thereby incurring huge losses.
Thus it is imperative that your partner is aware of all financial details, the paperwork is in order and all nominations are in place. Proper estate planning is not only important but also necessary for a “peaceful death” and a smooth transition to the next generation for the legacy to continue.
There's no harm in bringing in a professional to help. I would strongly recommend that you consult with a financial adviser who can evaluate your current financial situation, check your risk profile, help you plan your financial goals, recommend a suitable asset allocation and investment strategy and sit with you and regularly review your achievement of financial goals and suggest corrective steps where required. Make him your sounding board; let him give you an unbiased and non-emotional opinion on your financial strategy and bring financial discipline in your relationship and life.
I can't tell you what exactly makes love endure over time, but working through your money issues will certainly give your relationship some staying power.
Valentine Day is a good day to start and maintain a healthy financial relationship with your partner.
Here is wishing that your Love keeps blossoming, you Live Richer and enjoy life.
Happy Valentines Day!
Happy Investing!
Stay Blessed Forever!
Sandeep Sahni
You may contact us at:
91-9888220088, 9814112988
sandeepsahni@sahayakassociates.in,
info@sahayakassociates.in
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Note: All information provided in this blog is for educational purposes only. They don't constitute any professional advise or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.
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