marriage and finances

Marriage and Finances: Do We Fight Over Money Issues?

by Vinaya HS on September 16, 2011

in Finance

I think we’re extremely lucky in this aspect. We don’t fight over money issues. D’s extremely creative and artistic; the art and craft she does are things that I can’t even think of imagining. But she’s least interested in managing personal and household finances. To her, a gilt would be something one is guilty of. On the other hand, I’m the exact opposite. I obsess over numbers, especially those related to finance.

Perfect then. I don’t offer creative ideas and D doesn’t offer investing ideas. So we simply don’t fight. In fact, D’s first ever comment upon reading Capital Advisor was that she simply didn’t understand a word of what I’d written. To date, she doesn’t read my writing!

Other reasons why we don’t fight over money issues include (what we typically call “Segregation of Duties” in my line of work):

  • I take care of all regular and annual household expenses. I was used to this even before I met D and that simply continued. I can’t even think of asking her to share these expenses. D, however, funds all purchases of household white goods (no matter how expensive they are).

  • I take care of all travel expenses (getting there, accommodation, etc.). D funds all purchases made during travel (you’d be shocked to know that she once surrendered her useless endowment policy to fund her purchases during one of our travels). This was a mutual agreement we got into when planning for our first trip together.

  • I plan both of our Flexible Benefit Plans at work. I file both of our income tax returns. I organize and maintain all paperwork.

  • I also manage D’s investment portfolio. She transfers whatever amount she can each month into my account and I subsequently invest it in her name. I give her an update at the end of each month on how things have fared.

  • But, most important of all, we share a common vision for achieving financial independence and then financial freedom.

How about you? How do you avoid fighting over money issues with your partner?

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I’ve automated our utility bill payments. But my definition of automation is a bit wide.

Electricity, phone (both landline and cell), and wireless broadband are automatically debited from my savings account on the respective due dates. This is automation as we know it. However, for water supply, newspaper, and cable television, I pay six months in advance — at Bangalore One for water supply and to the respective agents for newspaper and cable. Our cable operator, in fact, gives a great discount for advance payment. This too is automation — in my opinion — but from a slightly different perspective.

Cooking gas is the odd one out — we pay for it as and when we avail the facility (roughly once every couple of months).

That said, D and I are off to the Maldives for an eagerly awaited vacation. We’ve been saving up for a while for this trip. Time to hit the beach without worrying about how to pay for it. :-)

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In response to how we plan our travel, a colleague wanted to know how much the “ridiculous amount” I was referring to in that post amounted to. Well, I can’t give a specific number for obvious reasons, but I’ll try and publish some figures.

  • We set aside about 10% of our combined post-tax (take home) income each month in our Travel Fund.

  • Our annual travel budget is in the very low five six figures.

It is a “ridiculous amount” but our one indulgence.

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A reader asks,

I work for a multinational and my wife works for the Government. We normally use my salary for day to day expenses while my wife’s salary remains almost untouched. Where can we save/invest her income while keeping our peace of mind (not keen on the equity markets).

Here’s what I read from your situation: A steady and fixed monthly cash surplus that you’d like to save in non-equity instruments.

Now, what are your options?

I’d strongly recommend the 5-year Post Office Recurring Deposit scheme. Given the stability of Government employment, the lock-in period plus the requirement to make a deposit each month shouldn’t be a concern for you. At the end of 5 years, should you be in a position to do so, you can extend the account for a further block of 5 years.

I’d also recommend that you split your savings into multiple deposit accounts. For example: Suppose you plan to save Rs 20,000 each month, open 2 deposit accounts, each for Rs 10,000. Provides a degree of financial flexibility.

What do you think?

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Going purely by the numbers I recently highlighted, both D and I ought to put our money into these infrastructure bonds.

But, in my case, I don’t want to invest my money just for the purpose of lowering my income tax. I’d rather pay a marginally higher income tax, improve my cash flow, and invest in line with my ongoing objectives.

In D’s case, she’s OK with investing her money if it can help lower her income tax. ,but she doesn’t have the mandatory Demat account at the moment. As CFO, I’ll let this opportunity pass since more such issues are expected in the pipeline. Since the bonds can now be subscribed to in physical format too, I will get this done for her in the coming week.

That about sums up what we’re doing. How about you?

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Marriage and Finances: How We Plan Our Travel

by Vinaya HS on October 8, 2010

in Finance

Travel is our #1 goal.

Other goals always take the backseat.

In fact, I’ve put-off some much needed touch-up (dents and bumps) to the Swift in order to meet our travel budget. I’m not a fan of “package” trips and thankfully neither is D. I plan our travel meticulously — everything has to be hand-picked especially the accommodation. Our costs are therefore much higher than equivalent “packages.” We really do spend a ridiculous amount on travel. But we have one simple rule that we live by:

  • No travel until we have the cash to pay for it.

Travel costs are of course fully charged on my credit card but they’re charged knowing that there is enough cash balance in our Travel Fund (we set aside a certain amount each month from our salaries) to pay them off when we return.

Save cash. Travel. Pay card. That’s our mantra.

Over to you. How do you plan your travel?

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Ask the Readers: Financial Compatibility

by Vinaya HS on October 4, 2010

in Finance

This one’s for the married/soon-to-be-married folks. Came from a thought I had while writing on marriage and finances.

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I never ask D how she spends her money. Neither does D ask how I spend my money. So long as we’re on track with our financial goals (individual as well as shared ones), we’re free to utilize our respective free cash flow in whatever way we want to. No questions asked. We don’t pool our income and we have no plans of doing so. I earn, fund my/our financial goals, I spend/save/invest. She earns, funds her/our financial goals, she spends or asks me to save/invest. Simple.

A foundation for this philosophy to work, however, is that you need to know and trust the financial habits of your partner.

How does it work in your household?

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One of the most important things that you ought to know about your spouse before marriage is the financial liabilities that he/she brings into the relationship. Because, after marriage, they really do become “our” liabilities. In our case, I’d explicitly mentioned to D that the Swift was on a loan — I recollect mentioning the minutest details of the loan — and that was the only liability I had. D, of course, has never had any liabilities ever.

Post our marriage, every financial choice that we made was made around what had now become “our” liability. After each EMI left my account, I’d send an SMS to D saying that ‘N’ number of EMIs were now left. We desperately wanted ‘N’ to quickly reach zero and it happened because both of us had a common objective: that of clearing “our” liability.

What do you think? Have you and your spouse had such a common objective? How did you go about achieving that?

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Having tried a good number of cell phones — including a QWERTY-one from Spice Mobile! — since the demise of my built-like-a-tank Nokia 6681, I’ve found the one that I was looking for: the Nokia E52.

Here’s the top three things that I love about the E52:

  • Call quality is exceptionally good.
  • The battery has exceptional stamina. I charge my E52 roughly once every four days.
  • Skype runs flawless over Wi-Fi. I’ve had hour long work-related calls (where I need to dial an international landline) without the slightest hitch.

At 12k, it’s a steal.

But I had a real hard time convincing D when I wanted to purchase the E52 (especially after the HTC Touch 3G, the Nokia 5030, and the Spice Mobile QT44). It’s not easy being the CFO especially when you need approval for capital expenditures from the Board of Directors. :-)

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Marriage and Finances: Who’s the CFO?

by Vinaya HS on September 17, 2010

in Finance

Within our household, I am.

D doesn’t really break her head over income, expenses, cash flows, saving, investing, taxes, etc. Whether Section 80C offers an additional savings avenue of Rs 20,000 per year through infrastructure bonds or not isn’t really a topic that she’d like to talk about. Her dad used to handle everything from the time she started her career and now that responsibility has shifted to me. One of the best things her dad has done is getting D to automatically save through VPF from Day 1. I wish I had had that insight.

Planning, saving, and investing for her goals are all done by me. But here’s the interesting thing though, I keep our investment portfolios separate. She has hers and I have mine and I’ve found this a whole lot easier to track and manage. So long as it’s not losing money, D’s OK with my portfolio management services. :-)

So, how does it work in your household? Who’s the CFO?

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Marriage and Finances: Me or the World?

by Vinaya HS on September 10, 2010

in Finance

If D, through her finances, can help someone truly in need or make someone happy, she will go out of her way (including entirely dropping her own financial plans) and do her bit. Her philosophy is that if your money can make your present a better world (qualitatively, not quantitatively), then that’s where you should channel your money.

I, on the other hand, have a plan for each and every rupee in my finances. My plan first and then the world.

It goes without saying that our perspectives have clashed at times. Which one’s right? Which one’s wrong? Is there a middle ground? I think there’s no definite answer to these questions because our individual perspectives are a direct result of our individual experiences and beliefs.

What do you think?

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As a family, we need health insurance coverage for myself, D, and D’s parents. Through my job, I have health insurance coverage for both D and myself. Through her job, D has health insurance coverage for herself and her parents — I could have added my name too, but didn’t see the need to.

In addition, I recently bought individual health insurance covers for both D and myself (Star Health’s Medi-Classic policy). I’m also planning on buying individual health insurance covers for D’s parents (looking at the market trend, a job might not always guarantee health insurance benefits for parents).

Ideally, we should have gone for a family-floater cover, but none of the policies I researched were worth buying (really low cover, too many exclusions, and too many terms and conditions) and hence this approach.

How have you gone about procuring health insurance for your family? I’d like to know.

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Because we haven’t yet seen a need for having one.

But most personal finance advise that you read online suggest having a joint savings account with your spouse (especially when your spouse is working which means you can share household expenses and such) — I doubt if these apply in an Indian context.

We were happy with the way we were managing our accounts before our marriage and there’s no reason to change that now. There is one situation, however, that might warrant having a joint account: access to our emergency fund, since either of us might need it on short notice. A joint savings account with individual ATM/Debit cards might be the right solution.

What do you think?

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Tweets on 2010-08-14

by Vinaya HS on August 14, 2010

in Finance

If you and your partner are not in agreement with your long-term plans, actions on behalf of those long-term plans are useless.

Source: amzn.to/bMo6qk

D and I have a long-term goal: Financial Independence.

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Marriage and Finances — An Introduction

by Vinaya HS on August 13, 2010

in Finance

When D entered my life, one of my plans for this blog was to write about aspects of personal finance as a couple. I didn’t get a chance to really work on this idea until now — and that’s a good thing because it’s been nearly an year and a half since I met D and this has been ample time for me to understand these aspects better.

Here’s an example for how varied our personal finance experiences are:

D hasn’t ever applied for a loan and doesn’t know how to apply for one. Compared with D, I am a grandmaster — I’ve had credit card debt, an employer loan to repay that credit-card debt, a personal loan, and two car loans.

I plan to explore more on these lines (how individual financial beliefs, philosophies, experiences, and goals mold in the relationship of marriage) in future posts. Let me know if this sounds interesting.

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