These are the financial dos and don’ts for marital harmony

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Handling of finances is one of the major emotional battlegrounds of any marriage. A couple should always take financial decisions jointly. It is important to recognise one or two divergent preferences and then to maturely cater to disparate objectives because financial harmony does lead to marital harmony.

After marriage, all responsibilities are meant to be shared by the partners. Managing finances is no exception to this. The partners should come together to identify individual as well as joint responsibilities when it comes to finances. While most of the expenses will be shared there will be some that will be done individually. Make a list to bifurcate the expenses.

“As a couple, you should have a long-term, medium-term, and short-term goal. Short-term objectives could include home renovations, organising a function, and so on; medium-term goals could include buying a car or taking a vacation; and long-term goals could include buying a house or, if you’re slightly older, sending your child overseas. Determine how much you need to invest now to attain these goals,” Prateek Singh, founder, LearnApp.com, told Money9.

Young couples these days generally prefer to keep their finances separate, however this might not be a right thing to do. Since the expenses, financial goals, etc. are going to be achieved together, the income and investments should also be planned together.

Banking

A common pattern noticed among young couples is to have multiple bank accounts for different things. The account where payment for occupation is received is held in single name. Whereas a bank account is opened in both the names for expenses, investments or joint finances. Since it is advisable to make investments in both the names, this account is used.

“One needs to realise that the first holder in any bank account is its primary owner and the money then belongs to him/her. Rather than opening a separate bank account, add each other in the existing accounts as second holder and transact from there. If the banking transactions are clean and kept separately, the wealth created using money from those will also have clear demarcation,” said Forum Shah, CFP.

Couples often don’t seem to change nominations in already held financial products. While this can be a conscious decision, it has to be discussed.

Loans

While it’s advisable to take loans for necessities rather than luxuries, the lines between these two have increasingly blurred over time.

When a newly married couple set on their journey together, they may have goals of buying a house and/or car if they already don’t own one. Depending on the money available with each of the partner for purchasing the asset, the loan will have to be taken.

“By adding your spouse as a co-applicant in a home loan, you can improve your eligibility, avail of higher loan amount at a comparatively lower rate of interest, and also enjoy tax benefits on individual ITRs. Women primary applicants get a 5 bps concession on home loan interest rate. So, if your wife supports a monthly income, you should certainly add her as a joint applicant & seal a better rate of interest,” said Raj Khosla, founder and MD, MyMoneyMantra.com.

You will pay less and also save up to Rs 1.5 lakh for principal repayment and Rs 2 lakh on interest repayment on each individual ITR.

As for car loan, you may not want to apply for a joint loan as loan amount is much lower than a home loan and there is no tax benefit. Also, a joint applicant is equally responsible for repayment of the loan.

“It is not recommended to opt for a joint car loan and exhaust the credit limit of both the partners. A couple should protect each other’s credit score & enjoy greater credit worthiness,” Khosla added.

Documentation post-marriage

If wife decides to add husband’s surname it is absolutely necessary for the name to be changed in all the documents. With stringent Know Your Customer (KYC) requirements, it is prudent to have the name appearing same in all identity documents, investments, bank accounts, insurance policies, etc. A slightest mismatch in the documents can lead to technical glitches in investments in future.

“If wife decides to add the partner’s surname, better get it changed in all the key documents like Aadhar card, PAN card, driving license, passport and address as well. If not done on time, such minor issues can create a problem even while making a Will,” said Gaurav Mashruwala, financial planner and author of Yogic Wealth.

Joint insurance

Insurances are of two types. General insurance and Life insurance. Within these, few types of policies are required by for an individual only.

“In all probabilities, Life Insurance should always be separately purchased by the couple. Both individuals should buy term plans according to their income & needs. The health insurance plan however should be bought as a Family Floater Plan as it offers more comprehensive coverage at affordable price quote,” said Khosla.

However, according to Shah, whether the policy should be a family floater or an individual cover will depend on the overall amount a family can spend towards premium payment, the health history of family, etc.

If both partners are working, there may be a possibility that the employer provides health and life insurance. However, one should not only depend on the employer cover and obtain a personal cover over and above the employer’s insurance cover. This ensures continuity of insurance cover in case of job change/job loss.

Go on financial dates

An interesting advice from Mashruwala is that couples should go on financial dates to avoid trouble and increase financial transparency.

“For years I have propagated the concept of financial dates. Couples to plan a financial date almost every quarter and discuss their economic plans, investment strategies and future goals during this time. It can add the necessary perspective and value to your financial planning as a couple,” said Mashruwala.

The pandemic has taught us a few harsh lessons and as such, couples should ensure that they keep each other informed about their savings, investments, policies and bank accounts etc. Further, each partner should be careful to mark the nominee so that there is a transparent and hassle free succession.

Its interesting husband and wife are considered the adjacent wheels of a chariot. Unless both don’t move in harmony, the chariot itself cannot move forward.