By Arlyn Tan
Marriage can be a bed of roses when there is peace, comfort, prosperity, togetherness and happiness. On one hand, it can be a bed of thorns when there are differences in opinion where one partner takes so much effort to align to his values with the other. One critical area where alignment or disagreements happen is in the financial decisions on cash and wealth management.
Financial personality, background, and experiences dictate the attitude on money by a person. The financial compatibility of the two different individuals plays a big role in marital success since decisions on money need to be done by both of them.
Communication in marriage has always been a major ingredient of a healthy & sustainable relationship. Although finances may be a difficult topic, the couple ought to take time to extensively discuss their game plan when it comes to income, expenses and capital investments.
1. Income
In the current society, there is no hard rule when it comes to the amount of contribution to the household income by husband and wife. It is based on the couple’s preference as circumstances are taken into consideration. When children are still in the toddler stages and up to the elementary levels, mothers are usually at home to rear the children. Husbands take the load of putting food on the table.
In some instances, women work part-time to juggle the roles of being a mother, wife, & house manager. Women argue that they want to continue their personal development while they have a growing family.
The areas of discussion would be the sources and amount of income to sustain the preferred lifestyle and address investment funding. Liquidity levels are very important for mental wellness. Just imagine how life will be when the budget is so tight that couples need to borrow money to pay for the basic household expenses i.e. utilities, rent, food.
2. Expenses
Couples will have an easy time discussing the expenses if they separate their needs and wants. Needs are the unavoidable expenses like rent, insurance, water, food, gasoline, cellphone. Wants are avoidable expenses that can take 30% of your budget which include clothing, self-care, travel expenses, special meals and hobbies.
Setting aside money for savings, emergency fund, retirement fund, and debt payments before spending can help control the expenses. Excessive spending can lead to unnecessary loans which incurs additional expense in the form of interest. Debt contributes to low self-esteem ,and impaired cognitive functioning which can further lead to panic and fear. The spillover of stress to the couple’s relationship can’t be underestimated.
Budgeting is a topic and task which both husband and wife need to decide on. It is better to determine the do’s and don’ts of spending and saving before any unintended consequence pops up.
3.Capital Investments
When income is more than the expenses, there is room for investments in properties, businesses and the stock market. The proper allocation of investments will depend on risk profiles, time horizon and goals of the couple. Portions of investments can be apportioned to address the objectives on capital appreciation and income generation.
On top of the topics, it is noteworthy to take note of these 3 action items on effective money management by husband and wife.
1. Proper Documentation of Assets.
Doing an inventory of assets can help determine those which are conjugal, or which are not. The ownership of assets can be born from hard work of the couple or inheritance from parents. The basis of future distribution will depend on the balance sheet ( assets and liabilities) of the couple.
2. Be Clear on the Roles.
In a traditional set-up, the breadwinners would take the responsibility of 100% expenses of the family. However, with the pandemic, wives are expected to help to make sure the stream of income will not stop in case the breadwinner is asked by the company to stop working.
Taking advantage of the insurance system which can lighten the load of an individual’s accountability on medical bills, car accidents, and sudden demise of a partner.
3. Be Open to Changes.
Couples focus their energy on the well-being of children at a certain stage. This stems from the belief that education and time well spent with children are the best investments. However, couples will grow old one day and they will be on their own. They need to also allocate their present funds for their retirement which includes a budget for lifestyle and medical conditions. Changing mindset can unlock better and robust financial plans that can withstand pandemic and unexpected circumstances.
The more proactive the husband and wife are in discussing the money issues, the easier for them to work together. Set up rules, trackers and keep on trying to become better in managing your cash, income, expenses & investments. Seek the assistance of a financial advisor who will help you in the roadmap design towards financial prosperity while taking into consideration your different life stages. Allow your regular money talks to be one of the forces which can create a positive impact to your marriage and peace in the home.
When the partners’ attitudes toward money and prosperity are congruent, less stress is experienced.
Arlyn Tan is a Strategic Wealth Consultant. She helps individuals and organizations on how to maximize the value of their money through risk, health & wealth management. Her mission lies in making sure that clients achieve 3 things. First, they reach their milestones on time with sufficient resources. Second, they protect them from the impact of economic losses secondary to unexpected events. The third and most important is that they enjoy meaningful and balanced lives.
LinkedIn/Twitter: Arlyn Tan
FB/IG: @pinnaclefinlitcoachph
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