It is the season for love. The weather is just right to make those right moves. Before you ride on your imagination, let us be clear about the moves in this conversation. They are about managing your money together with your loved one. This column advocated for a money date you should take with your spouse at least once a month. The idea is to keep yourself informed about money-related affairs. The two of you must be on the same page about all aspects of money management. These include professional advice, asset allocation, will planning and execution, and big and small financial goals.
A healthy relationship about money does not mean you must have joint accounts for everything. You can keep your finances separate but keep each other in the know of things. Creating a budget is the fundamental step in personal finance. If you manage your income and expenses well, you will have a surplus at the end of every month. That should bring you to the issue of allocating your money to suitable asset classes to build a strong foundation for your future.
Your spouse may or may not be financially aware. If both of you earn an income, you need to discuss creating an emergency fund as a priority. Once done, you can carve out money each month for the future. Even though you are committed to each other in a relationship, you need not have everything in a joint account. Maintain a separate bank and investment account for your monthly investments. You can put the money for short-term or long-term family expenses in a joint account. That could include monthly expenses like groceries, school fees for children or entertainment. The money you need to save for your child’s future will only rise with years and inflation. It would be a good idea if together you contribute early.
You need to work like a team with your loved one regarding money. You can divide responsibilities. So, if the investment portfolio needs upkeep, that should be done by one person. That could include talking to financial advisors, understanding current market conditions and making appropriate changes to the portfolio. The most important thing is to communicate with each other on that aspect. You can let your spouse know the meaning of these changes and the reasons for doing them. You must allocate your money to appropriate asset classes based on risk perception. It is an opportune time to discuss them on a money date.
Talk about factors that influence your savings and investments. You can review recommendations made by your financial advisors. If you use separate ones, you can compare notes. Sudden developments in life could bring surprise expenses. You may want to talk about dealing with the financial situation together. That could mean making changes in your saving and investing habits. The most crucial aspect of your conversations should be to make a collective sense of the factors influencing your money. It does not matter whether you are operating together or separately. You must be able to connect the dots and know where to make appropriate changes. The other key aspect of joint finances is to align your investments with your financial goals.
Together, you may think of dreams you wish to achieve in the short or long term. Convert those dreams into individual financial goals. So, it is like sharing your bucket list and figuring out how to tick every line item. Your hard-earned money can do the hard work for you, provided you give it an appropriate direction. That will come from the way you think about your financial goals. Your asset allocation will depend on that.
The other important thing to discuss with your spouse is to enhance your ability to sustain losses or hold your ground for the discipline needed to invest regularly. As a couple, you will face trying times. You must not let your investments suffer. There is always a way out that you can figure out jointly.