Gone are the days when taking joint financial decision with your partner was a difficult task and the male member of the family controlled the financial fate. With more women bringing home the bacon, it is important to jointly understand and manage your finances well.
A joint financial management requires transparency, mutual trust and shows a shared commitment towards the common goal. Follow the mentioned pathways to manage joint finances efficiently: Create a budget-decide who pays for what Your budget discussion starts with the question: What are the household and personal expenses? How do you handle loan EMIs? Who will pay off the balance on the credit card bill? These are individual decisions, but solutions happen by discussing things out. If your partner has a lot of debt, you may offer to help him/her out with the payments to become debt free sooner by taking on a larger percentage of the household expenses to tackle the debt payments.
Create a family budget and identify the cashflows expected for the month. Take joint ownership of common expenses like household, children expenses, etc and identify who must shoulder the responsibility of paying for loans and other debts. A good budget in place will help the couple to jointly manage their finance with a shared responsibility and reducing voluntary spends.
Define common goals
Planning isn’t just about immediate needs. It is about the future as well. If you plan to buy a second home, save for the kids’ college educations and have always dreamt of touring Europe, then the answers are different for every couple based on how much each person earns and what each person sees as a priority. But the important thing is to have a conversation with your spouse, figure out what your goals are and devise a strategy to get there.
Both individuals should identify the goals that they individually must shoulder as per the proportion of the income they earn or the surplus they have as per their family budget. It is a disciplined and dedicated approach to achieve common goals for the family.
Saving for the Golden years
Retirement is a critical journey that needs to be planned jointly by the couple. Identify when each member wants to retire and the retirement bounty is expected to be received. There could be a flow of income post retirement and goals like vacation and kid’s wedding could fall beyond the retirement age. All these must be discussed mutually and they should identify the stretch that one of the members should take in terms of retirement. Assuming one member intends to pursue a limited earning post-retirement, which will reduce the stretch in terms of investments that needs to be done today for the retirement. Plan till life expectancy of both members.
For example, if the husband is elder by three years and both husband and wife plan to retire at the same age, then the wife will still continue to earn for three years after husband retires. At times the couple plans to retire at the same year. And so the work life of the wife gets reduced by three years.