Involve spouse for best results

Involve spouse for best results
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Highlights

One of the best ways to take your spouse into confidence in finances, despite her lack of understanding, is to maintain proper accounts.

One of the best ways to take your spouse into confidence in finances, despite her lack of understanding, is to maintain proper accounts. The simple way is to have one file for all the expenses, one for the bank details and the other for investments. This will help reach out easily in case of a need

Traditionally, Indian families were single income households and mostly have a sole bread winner. This has lead to financial decisions especially those of investments has been vested with that individual. But gradually, there has been a shift in the family structure with both the husband and wife are working and even extreme concepts of DINKs (Double Income No Kids) have come into existence.

Even in case of a single working member, while making a financial plan, one should involve the spouse/partner into consideration. And in either way, the key to good financial health is optimal utilization of income while balancing out the expenses with an eye to invest the surplus for future goals.

Be it tradition or lack of understanding, some people are hesitant to discuss the money matters with their spouses. But, it’s of paramount importance that both the partners should involve in budget making so that expenses are clearly identified and managed while the surpluses are recognised and invested.

In either case of single or double income families, each should be aware of all the sources of income, the liabilities, loan schedules, insurance plans and bank details like pin/password, etc.

Arguably, one of the best ways to involve your spouse in the finances, despite their lack of understanding, is to maintain proper accounts. The simple way is to have one file for all the expenses, one for the bank details and the other for investments. This will help to reach out easily in case of need.

Budgeting is the first step for financial planning. Experts insist on 20-80 rule of investing/saving, 20 per cent before planning for expenditure. Most families don’t budget and if one sticks to this principle, the results would be quiet surprising.

It’s likely that one ends up with more money than one thinks would be possible. While budgeting, the expenses should be categorised into discretionary and non-discretionary. This way one could reduce the excessive or impulsive spending. This also helps in prioritizing ones goals of retirement planning, children education, vacation, house construction, etc.

Life is always full of surprises! It’s advisable to have a contingency fund available for exigencies within the budget. This helps as a protection against an unforeseen or increased expenses or loss of job, etc.

Though, there is no formula to arrive at the contingency fund required for a family, it’s usually the kind an amount that reflects the lifestyle of that family. This could needn’t entirely be in cash but partly in liquid MF, swipe A/Cs or even a dedicated Credit Card (though, with no/less maintenance fees).

Involving spouse during a financial planning exercise would add value to identifying the household expenses more accurately and also refine the long term goals. And intermittent goals of appliance upgrade, vacation planning and children needs could be well defined.

This will not only increase the trust between the partners but also in the worst case scenario of death of an individual, the surviving spouse would be left with no surprises both pleasant and sad.

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