Tuesday, October 30, 2007
For Richer or Poorer
I have received five wedding invitations for the last quarter of 2007! Wedding is a joyous occasion and to many couples, it is one of the most significant events in their lives.
I remember fondly my own wedding more than six years ago. Despite the joy and excitement leading to the big day, preparation for the wedding was peppered with little squabbles over how the money was spent. It was then that we realized that even small differences in spending habits and money attitudes can lead to potentially major conflicts.
Through my years of working with many couples in their financial planning matters, I have come to realize several unique money habits on planets Venus and Mars:
- men invest more than women and are more aggressive in their investments
- women are more likely to listen to financial advice from their friends and family
- women tend to spend on pampering themselves and others with shopping sprees, overseas trips, gifts etcmen, on the other hand, tend to splurge on things like cars, sports, electronic gadgets etc
Another thing that I have noted is that communication and financial planning are often lacking between many couples. For example, of the many couples that I work with, the majority have neither established a budget nor planned for their retirement together. And many couples have shared with me that the main source of financial disagreements is the amount of personal spending.
To avoid having little squabbles over money issues snowball into big fights that might affect the relationship, couples should sit down and start planning for their financial future. I would definitely recommend doing it even prior to settling down. It is important for a couple to understand each other’s money attitudes, spending habits and financial commitments.
Here is how a couple can get started:
1. Discuss and prioritize goals together. Being a couple will mean that a party’s money decision will inevitability affect the other party, whether directly or indirectly. It is therefore highly recommended for financial matters to be thoroughly discussed and for decisions to be made jointly. Some couples that I know of would establish their own sets of financial rules such as ‘decision to purchase any household appliance that costs below a $100 can be made single-handedly’ or ‘decisions with regards to the financing of children’s education will be made jointly regardless of how big or small the amount’ etc. I’m not saying that such ‘rules’ will work for everyone, but it is a good start for a couple to communicate and agree on the ‘CANs’ and ‘CANNOTs’ when it comes to their joint finances.
2. Communication and honesty are critical. The lack of honest communication is often the cause of the lack of joint financial planning, which can prevent couples from achieving a brighter financial future together. Some couples avoid talking about money-related issues because they know that there would be disagreements. However, avoidance is like sweeping the dirt under the carpet. Eventually, the pile buried underneath will become so huge that it’s impossible to ignore and having to deal with it then will be much more difficult than it would have been if the problem had been addressed right at the beginning.
3. Understanding each other’s spending habits. Relationships often involve a little give-and-take sometimes. No two persons will have exactly the same money personalities. It is important to talk things through and to try to achieve some kind of a compromise if opinions greatly differ. Sometimes, being able to identify and maximize one’s strengths while reducing one’s weaknesses is the key to better financial health. For example, one party might be more meticulous and can easily work out the household budget despite the nitty-gritty details whilst the other party might be more financially-savvy and can help source for financial instruments to help grow their wealth.
4. Joint or separate accounts? There are no hard and fast rules on this one as different strokes work for different folks. I know of couples who maintain both joint and separate accounts. They would calculate and plan their household budget first and each will contribute an agreed amount into a joint account which goes towards the payment of household bills, children’s education, insurance, investments, savings etc. The excess money will then go into their individual accounts for their own personal spending without having to account to the other party or feel guilty about the occasional indulgence in a pair of stiletto or the latest mobile phone. Other couples might choose to maintain separate accounts and work out a ‘who-pays-for-what’ arrangement whereby the agreed bills that each party is to pay for will be charged to their individual accounts. A few couples that I know of have only a single joint account where all their salaries are credited into and bills debited from. Ultimately, the method selected must be agreeable to both parties involved.
So before you vow to take your spouse ‘for richer or poorer’ for as long as you both shall live, do take some time off your busy wedding preparations schedule to have a heart-to-heart conversation on your joint financial issues which I deem is far more important than the colour of the napkins on the banquet tables!
I remember fondly my own wedding more than six years ago. Despite the joy and excitement leading to the big day, preparation for the wedding was peppered with little squabbles over how the money was spent. It was then that we realized that even small differences in spending habits and money attitudes can lead to potentially major conflicts.
Through my years of working with many couples in their financial planning matters, I have come to realize several unique money habits on planets Venus and Mars:
- men invest more than women and are more aggressive in their investments
- women are more likely to listen to financial advice from their friends and family
- women tend to spend on pampering themselves and others with shopping sprees, overseas trips, gifts etcmen, on the other hand, tend to splurge on things like cars, sports, electronic gadgets etc
Another thing that I have noted is that communication and financial planning are often lacking between many couples. For example, of the many couples that I work with, the majority have neither established a budget nor planned for their retirement together. And many couples have shared with me that the main source of financial disagreements is the amount of personal spending.
To avoid having little squabbles over money issues snowball into big fights that might affect the relationship, couples should sit down and start planning for their financial future. I would definitely recommend doing it even prior to settling down. It is important for a couple to understand each other’s money attitudes, spending habits and financial commitments.
Here is how a couple can get started:
1. Discuss and prioritize goals together. Being a couple will mean that a party’s money decision will inevitability affect the other party, whether directly or indirectly. It is therefore highly recommended for financial matters to be thoroughly discussed and for decisions to be made jointly. Some couples that I know of would establish their own sets of financial rules such as ‘decision to purchase any household appliance that costs below a $100 can be made single-handedly’ or ‘decisions with regards to the financing of children’s education will be made jointly regardless of how big or small the amount’ etc. I’m not saying that such ‘rules’ will work for everyone, but it is a good start for a couple to communicate and agree on the ‘CANs’ and ‘CANNOTs’ when it comes to their joint finances.
2. Communication and honesty are critical. The lack of honest communication is often the cause of the lack of joint financial planning, which can prevent couples from achieving a brighter financial future together. Some couples avoid talking about money-related issues because they know that there would be disagreements. However, avoidance is like sweeping the dirt under the carpet. Eventually, the pile buried underneath will become so huge that it’s impossible to ignore and having to deal with it then will be much more difficult than it would have been if the problem had been addressed right at the beginning.
3. Understanding each other’s spending habits. Relationships often involve a little give-and-take sometimes. No two persons will have exactly the same money personalities. It is important to talk things through and to try to achieve some kind of a compromise if opinions greatly differ. Sometimes, being able to identify and maximize one’s strengths while reducing one’s weaknesses is the key to better financial health. For example, one party might be more meticulous and can easily work out the household budget despite the nitty-gritty details whilst the other party might be more financially-savvy and can help source for financial instruments to help grow their wealth.
4. Joint or separate accounts? There are no hard and fast rules on this one as different strokes work for different folks. I know of couples who maintain both joint and separate accounts. They would calculate and plan their household budget first and each will contribute an agreed amount into a joint account which goes towards the payment of household bills, children’s education, insurance, investments, savings etc. The excess money will then go into their individual accounts for their own personal spending without having to account to the other party or feel guilty about the occasional indulgence in a pair of stiletto or the latest mobile phone. Other couples might choose to maintain separate accounts and work out a ‘who-pays-for-what’ arrangement whereby the agreed bills that each party is to pay for will be charged to their individual accounts. A few couples that I know of have only a single joint account where all their salaries are credited into and bills debited from. Ultimately, the method selected must be agreeable to both parties involved.
So before you vow to take your spouse ‘for richer or poorer’ for as long as you both shall live, do take some time off your busy wedding preparations schedule to have a heart-to-heart conversation on your joint financial issues which I deem is far more important than the colour of the napkins on the banquet tables!
