Expert advice

Nov 09, 2017,09.46 IST

The power of two: How finances should be handled after marriage

Suresh Sadagopan

A pair is a recurring feature in life. We have a pair of hands, legs, eyes, ears etc. which we take for granted. Take one out & the other is not half as effective. With one eye, we will not get the depth, with on hand a simple thing like tying a shoe lace will be an ordeal. With one leg we would just be hobbling around like, say, Long John Silver!

A pair can be very effective & in some cases is complete & will be usable only if it is a pair, like - a pair of scissors, a pair of socks, a pair of jeans etc.

In life, we have pairs alright. The institution of marriage pairs up people and makes them constant companions for life. They are to share the joys and sorrows, the ups and downs of life - their life is inextricably linked with each other, the family they create & to the larger, extended family.

Society has built expectations from males & females. Males are supposed to be the ones who provide for the family & the female aspect is supposed to focus on nurturing, care-giving, taking care of the home front & raising the kids. This cliched expectation is not really valid any longer and they have moved beyond traditional roles and has resulted in increasing participation of women in the workforce.

Still, women are yet to break off the shackles in one area - money. Finances are seen as a male bastion and most women have simply accepted that as a given. However, their participation in the area of finances would be greatly helpful. Let us see how.

Plans work well when all agree - When the husband engages a financial advisor and creates a plan for the family, it may not capture the aspirations of the family correctly. For instance, the lady may have ideas on the child’s education, marriage, home renovation or even a new home at some future point, which may not have been properly factored in the plan. Had the lady participated in the planning exercise, the perspective would have been far more richer. When a plan is created with both spouses present, there is a good alignment & buy-in and the chance of the plan success goes up. Execution of the recommendations happens fully as they have both been party to the plan.

A balanced perspective - The man may be the one taking most of the money decisions - may be he is better informed on financial matters & is more involved in planning for the family’s future. When he is the only person involved, the risk inherent in any decision is a factor of his own risk bearing ability & there is a possibility that it is not in line with the required risk for the family. That is where the lady of the house comes in. She has a high stake in the well being of the family. When she too participates, she is a stabilising influence and the plan and the portfolio built will be more in line with what may be most appropriate for the family.

The bugbear called Execution - Many well meaning clients who have taken the financial planning seriously, stumble upon the portals of execution. If the client has taken on the mantle of executing the recommendations, it is an onerous exercise which would need diligence & doggedness which a busy executive would find difficult to bring forth. That is where the spouse can play an anchor role. The spouse can take on the executor’s role and can ensure that the plan moves smoothly along recommended lines. In case, they have hired someone to execute, the spouse can play the role of a facilitator & ensure they derive value from the planning exercise.

Knowledge empowers - Many women may think they are investing in Gold when they are buying ornaments & may think investments in property are the only way to build wealth. They may also have a view that Mutual Funds are & stock markets are gambling dens. Once they start participating, they start understanding the area of finances & the various nuances, enough to break out of outmoded constructs. Over time, they develop enough sophistication & confidence that they understand the domain well enough to take informed financial decisions which will stand the family in good stead.

Initially they may be unwilling participants. But, over time, we have seen women shaping up wonderfully well, that they become the primary points of contact for anything to do with the family finances. In some cases, they also are the only ones the advisor is interacting with as their spouse is too busy and have developed enough confidence in their abilities to play the anchor role.

We have seen it work. Women can play a pivotal role, instead of being a passive spectator when it comes to finances. They say, it takes two to tango. In finances, it works wonderfully - the power of Two!

Suresh Sadagopan is the Founder of Ladder7 Financial Advisories.
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