Marriage of Spread(sheets)!

The third vow in a Hindu marriage goes something like this:

The Groom vows to his bride that he will work hard putting all his efforts in bringing wealth and prosperity into the house and giving education to their children.

The Bride vows to her groom that she will act responsibly in maintaining the resources.”

While this may seem archaic, it essentially means that both man and wife will work hard to bring wealth and prosperity and manage the resources mindfully.

But it’s easier said than done, right?

Among millennials, 19% aren’t interested in either marriage or children. 

Wonder what the leading reason is?

Yes, you got that right. It is financial insecurity and issues driven by mismanagement of money.

Let me take you through the steps that will help you align your numbers with your spreadsheets.

  • Engage in Sensible and Mature Money Talk – It is crucial to understand each other’s outlook towards money. Discuss the financial goals the two of you aspire to and how you intend to fulfil those goals. It is important to understand how both of you will accomplish certain larger financial goals in life- such as buying a home, child’s future needs (education and wedding expenses), retirement etc. Don’t overlook the smaller goals like holidays or shopping sprees. While it is not possible to discuss everything, it is vital to be on the same page directionally. It wouldn’t be a happy marriage, right, if you and your partner are at completely different ends of the string, for example, about the idea of a vacation.
  • Be Honest & TransparentIt is of utmost importance to discuss your current financial reality. Pool in all your resources, earnings, expenses etc. Speak openly about your liabilities (what and how much you owe) as well, because you don’t want money matters to sour your relationship going forward. Do not hide your spending. Eventually the cat will be out of the bag, and it may be too late to earn back trust.
  • Be Flexible – Be open to discussions and don’t be too rigid. Try to understand each other’s goals and aspirations. It is not necessary that you always agree with your partner’s point of view, but it sure makes sense to arrive at a common place. Evaluate your options and mutually agree on the way forward. Don’t micromanage each other’s spending habits. Give some space as long as it falls within the broader budget.
  • Have frequent money dates – Assign a day in a week or month when both of you sit to discuss your finances, plan your expenses, and evaluate new investment instruments or saving plans. Share any financial difficulties that you may be facing. Ensure that both partners are on the same page about everything Money.
  • Open a Joint Account – Opening a joint Saving or Investment Account can be a wise move. Joint accounts give each partner equal access to the funds, making it easier to coordinate bill payments and other such expenses. And when you both can track joint expenses easily, you’re more likely to have open communication about your financial life —a key ingredient in a successful partnership. They also allow the surviving spouse to immediately access the money in case the other tragically passes away.
  • Apply for Joint Loans –  Being married gives you more flexibility when you’re trying to get a better mortgage rate or trying to apply for a large loan. However, this is not always true. If one of you has a poor credit rating, it’s not always advantageous to apply together. Nevertheless, if you do apply together, lenders will generally consider the lower credit score between you and your spouse.

Tax laws in India offer various concessions and deductions on loans – both principal and interest payments. For instance, while computing total income for taxation, deductions can be claimed under Section 24 and Section 80C for interest and principal respectively repaid on home loans each year. It is prudent for married couples aspiring to buy a home to take a joint home loan. This way, both the partners can obtain the benefits of Section 24 and Section 80C in their respective income statements. Additionally, many lenders also provide lower interest rates to women borrowers. Hence, couples can gain an added benefit by making the wife the first or primary borrower.

  • Have a Contingency Plan in Place – Life throws unpleasant surprises at us. Events such as layoffs, critical illness of a family member, medical expenses, natural calamities, and other unexpected expenses (house repairs, fixing a car breakdown, etc.), come without a warning and can have serious ramifications on your personal finances. Thus, maintaining an emergency or rainy day fund, over and above insurance is also important. Your emergency fund should equal up to six months of regular monthly unavoidable expenses, including on-going loan EMIs (Equated Monthly Instalments) if any. Plus, if there is a medical history of you or your family members, add 5%-10% extra for medical emergencies. Parking money in a separate savings bank account, a term deposit or an overnight/liquid fund are suitable options for contingency planning purposes.
  • Insure Yourself Optimally –  For insurance companies, a Couple is considered a safer bet than an individual. When it comes to insurance, your objective should be to safeguard your dependents from financial losses in case of any unfortunate event. That being said, it is important to buy an optimal life insurance cover based on your Human Life Value* – a prudent/scientific approach—rather than deciding on it arbitrarily. Similarly, in times when healthcare costs are skyrocketing, having an optimal health insurance cover is a must. If you are hospitalised and do not possess health insurance or have a sub-optimal health insurance cover, it could drain you financially.

In the 60 days following your marriage, you have the option to add your spouse to your health insurance plan. This is a no-brainer in some cases. For instance, one partner might have great coverage through the employer while the other does not. Moreover, insurers generally charge less for a single policy covering two people than they do for two separate policies. If you both have insurance before marriage, you should compare plans and sign up together for the better deal. You’ll also get far better rates on long-term care insurance as a married couple.   

*Human Life Value (HLV) — the monetary value of a human life, measured by determining the net present value of benefits that others (the decedent’s spouse, dependents, partners, employers) might reasonably expect to receive from the future efforts of the individual whose life is being valued.

Did you Know that you could Secure Your Wife’s Future with the Married Women’s Property Act of 1874 (MWP Act)?

What is a term insurance under the MWP Act?

“A policy of insurance effected by any married man on his own life and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interests so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate.”

Once a policy is availed under the MWP Act, it cannot be attached by courts for repayment of your debts. Only your wife and children will be entitled to the sum assured in the event of your demise.

For example, if you are a salaried person with a home/ personal loan or the owner of a business and have accumulated debts, your creditors will have first claim on your policy proceeds in the event of your death. Whereas, when you buy term insurance under the MWP Act, your wife and/or child(ren) will be the only ones who will have access to the claim amount – enabling you to secure their financial future.

You can avail this plan by simply answering “Yes” to the question “I would like to buy this policy under the Married Women’s Property Act (1874)”. Enter the beneficiary and trustee details e.g. the beneficiary name, relationship, date of birth and benefit share (in %). You can only choose your wife/child/children as beneficiaries. You are allowed to add multiple beneficiaries.

  • Update your Will and other Legal Documents –  It is critical to update all legal documents securing the financial future of your spouse in your absence. You sure want to avoid financial stress in times of emotional strain. Go through all your legal documents and incorporate your spouse’s name in them. Well, who said marriage was just about two People. marry your Finances too.

Remember that a change in relationship status has a bearing on your personal finances and the way you manage your hard-earned money. Keep a check on excessive splurges, monitor your spending habits, take control of your personal finances, and safeguard your financial future.

Talk about money often. It should be a routine part of your relationship, not a point of pride for one person or another.

An aligned spreadsheet will lead to a happier marriage.

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