13 June 2013

Know about your honey’s money :: Business Line

Be as open and forthcoming about your finances as you expect your partner to be.
When marriages break, more often than not money issues are among the top reasons cited.
Therefore, if you are looking to tie the knot, you should compare notes with your partner on how financially compatible you are with him.
Here are five facts you must be aware of about your fiancé’s finances (this applies to men too) before taking the final step.

SPENDING HABITS

Lesson one is to know more about his or her spending habits. Unchecked spending can land one in a debt trap, so it is important to know if your partner is disciplined with finances or is messy. Does he or she prefer the ‘good life’? Dining out, buying designer brands or clubbing can be quite expensive as leisure time activities. If you don’t share or understand your partner’s preference for these, it could lead to marital trouble. But a partner’s tendency to be too stingy can be a problem too. The key here is not to judge whether frugality is better than splurging but to decide how much you two agree on these matters.

DEBT

Ideally, not more than a third of an individual’s income should go towards repaying loans. When one exceeds this limit, there will be little money left for other needs of a household and any emergency that may arise. It will also restrict one’s ability to raise further credit in the future, be it for purchase of a home or a vehicle.
One way to find out a person’s propensity for debt is the number of credit cards in her or his wallet. Though holding a credit card by itself is not a red flag, it can be a signal to how credit dependent the individual is. Note that credit cards carry interest of over 25 per cent per annum on unpaid dues and it is not actually ‘free credit’.

DEPENDANTS

With the rising cost of living, it can be hard for a single earning member to support a joint family. More dependants could mean higher financial responsibility in the form of medical expenses of the elderly and expenses on education of siblings. You have to make room for these expenses when you draw the monthly budget as you get into the family, so it is better that you get to know about this in advance.

INCOME

Now, this should be the easiest thing to find out once you know a person. Just ask your partner about his or her take-home salary. Also, given that today one may lose his or her job at any time, any additional sources of income, such as interest on deposits or rent, can cushion you in difficult times. The supplementary income becomes key in cases where the person is self-employed. Business income may fluctuate every month, so provision for it. Also find out if your would-be partner is open to you pursuing a job after marriage, because if there are differences here, they may be difficult to reconcile later.

ASSETS

Family assets are a source of security. We don’t deny that there are many non-monetary factors that matter in a relationship, but getting the monetary matters out of the way can pave the way for a smooth relationship.
So, shed your misgivings and talk to your would-be life partner. Even gentle probing on how he commutes to office everyday, his hobby, his dream vacation, what did he redeem his credit card points for may tell you a lot about how he manages his finances.
And yes, don’t expect all these disclosures to be one-sided. Be as open and forthcoming about your finances as you expect your partner to be.