Why couples need to talk about managing money | Simply Save

Moneycontrol spoke to Pratibha Girish, a Certified Financial Planner and Founder, Finwise Personal Finance Solutions, on why it’s important for couples to discuss money matters and what are some key aspects to keep in mind.

Here are a few important points that Girish highlighted:

-Culturally, Indians don’t like to talk about money but it’s very important for couples to discuss money matters before they get married.

-Couples can start with casual conversations around how money is managed in their respective homes, how much is spent and saved, whether they have a financial plan, or the money discussions that their married friends have etc. This can give both partners an idea about the other person’s money values.

-It’s very difficult for married couples to manage all their money separately. Common goals such as retirement, family holidays etc. have to be managed jointly. But individual goals such as investing in upskilling oneself or taking care of one’s parents can be provided for separately. But all goals, whether joint or individual, require that each partner keep the other one fully informed on what is being done and why.

-Common money issues that many couples face – One, relates to expenses: what may seem a reasonable expense to one partner, may seem very extravagant or miserly to the other. Two, relates to the thinking around debt – one may be comfortable taking debt whereas the other person may feel debt must be avoided. Three, one partner may want to follow a conservative approach to investments, while the other person may prefer a more aggressive approach.

-Managing expenses – ideally, these should be split not equally but in proportion to the salaries of the two partners. This ensures that both are left with some surplus to invest. Also, ensure that you have a budget. Even if you exceed it sometimes, it helps to be conscious of it.

-Managing investments – even if each partner invests separately, ensure the other partner is kept informed. Also, both partners must have a good mix of investments (both debt and equity, for example), instead of one partner having only debt investments and the other, all equity investments.

-Joint or separate investments - having joint investments makes transmission easy in a situation where one partner passes away. But singly-held investments with the other partner as a nominee is fine, too. From a taxation perspective, it is clear that the tax liability falls on the first holder.