Matri-Money by Priya Sunder

It is not romantic to talk about money in a marriage. Money can cause deep chasms even between the most loving couples. But women need to establish their financial equilibriumin a marriage quickly, else they will lose ground, not just with their finances, but in their marriages as well.

As a director of PeakAlpha, a wealth management company that services more than 3000 customers, I have had the unique opportunity of observing the distinct changes that marriage brings in my clients’ perspective towards money.

Take the case of Aditi. I have known her for over seven years, from when she started her first job at a bank in Bangalore to her current job as a divisional manager at an engineering firm. Last year Aditi got married to her colleague at work. Having dealt with errant investors through the years, managing Aditi’s portfolio was a dream. She tracked her income and expense flows meticulously, saved and invested about half her salary while supporting her parents. In fact, she bore all the expenses for her wedding. She started investing into her retirement fund from the day she earned her first paycheck. She had also recently taken a home loan and bought a comfortable, two-bedroom apartment near her workplace.

Aditi and her husband met me last month to discuss their finances. She was unusually quiet for most of the discussion. At one point Aditi asked me if she could invest in money market fund instead of the recurring deposit her husband seemed to prefer. The husband snapped at her saying “ollarade” (loosely translated to ‘don’t talk rubbish’ in Tamil). He ignored her viewpoint, told her finance was too complicated for her to understand. He spoke about IRR and CAGR, capital gains and taxation and other such jargon to ‘impress’ her with his knowledge. Personal finance suddenly became a mountain too high to climb for a woman who was already fairly well versed with it.I was amazed at the transformation in Aditi’s personality.Her self-esteem was shot, and the husband had no idea of the extent of damage he was inflicting on her confidence.

I am often alarmed by the tectonic shifts in a woman’s attitude towards money before and after her marriage. After marriage, she often relinquishes the management of important areas of her life to her husband. She is happy to be in the shadows especially when it comes to money. Even if it involves her own security. She is content to have her husband, father, relative, and in one case even a god man make the financial decisions for her.This is especially true of women who are either home makers or who earn lesser than their husbands.

On the other hand, where the woman earns more than her spouse, she is a totally different person. She takes control of the discussion, asks most of the questions, and is assertive. These discussions very often lead to quick decisions and actions. Immediate friends and family may be good sounding boards, but areno substitute for a qualified professional when you’re trying to balance budgets and still meet all your life goals comfortably.

I would like all women to take control of their money regardless of whether they are employed or not, whether they are earning more than their spouses or not, whether they like it or not. Women need money management more than men do. Women typically live longer than men, and hencerun the risk of being single in her old age. She also has higher healthcare costs. She often takes career breaks for childbirth and family-related issues. When she joins the workforce again, she often takes a hot on her salary. Apart from this, there may be divorce issues where she needs to suddenly figure out what the joint assets, liabilities, insurance policies, and bill payments are. Without proper financial planning, she may find herself at the short end of the stick when it comes to dividing the assets in a divorce, orshe may become dependent on her children during retirement.

Money is the cause of strife in many marriages. Where the wife is a homemaker, the issues are about spending beyond the monthly budget. If the wife is working, then the fights are about the split of expenses between the partners. Either way, it is a good idea to involve both partners when reviewing monthly expenses.

We all have starting trouble. Here are some small, manageable steps to get you on the journey to financial independence-Pull up an excel sheet and start to get a grip on the family’s income inflows and expense outflows. Inflows would include all post tax income, interest income, dividend income, rental income or any other sources of income. Next, tally up all your monthly household expenses. Write down every little expense incurred in the sheet. Once you do this diligently for a few months, you will have a fairly good handle of what your average monthly expenses are. Next, add up all the expenses you incur in a year, such as insurance premium payments, school fees and uniforms, annual vacations etc. Divide them by 12 and add them to your average monthly expenses. You’d be amazed at how those little indulgences can add up. This exercise often turns out to be an eye opener for my clients. You’ll realize here if you are a profligate spenderor an illustrious saver!

Tally up with your expenses with your credit card statements and your ATM cash withdrawals. Check if your income is able to fund these expenses comfortably. If it does, calculate the average monthly surplus. Try and get this figure to be about 20-30% of your post tax income. Keep aside 5-10% of this surplus in a money market fund to handle discretionary expenses and emergencies that may crop up. Invest the remaining funds for your long term goals such as children’s education funding and retirement. Investing your surplus is important, because I find women good with balancing budgets, cutting down expenses and stretching the rupee. But, here is the paradox. The financial savvy ends there. What do you do with the money you have saved? If you don’t invest it wisely, inflation will eat into your savings soon enough and leave you poorer than last year. You’ll be penny pinching even more the following year.

For a homemaker, budgeting is an opportunity for the spouse to realize the impact of rising prices on a fixed budget. When the budget is tight, both of you need to solve it together by cutting down expenses. It is not a challenge that you should face alone. Where both partners are working, ensure the expenses are split in proportion to your incomes, so each of you has the capacity to start your own savings and investment plan.

Next, ensure that you know what you and your spouse’s retirement benefits are. Do check the existing funds in the company provident fund, superannuation and gratuity as well as company stock options. Track the investments made in different assets such as fixed deposits, bonds, equities, mutual funds, PPF, and funds in the savings account. Within investments, ensure that investments are made in either or survivor mode and that you are the nominee on your partner’s insurance policies, demat accounts and vice versa. Draw up a will and list down all the assets and the way you would like them distributed after your time. Your spouse’s will should leave you as the beneficiary of his assets and vice versa. This was you’ll feel more in control of your finance and ready to face any curve balls that life may throw at you.

It is a good idea to enlist the help of a financial planner to help you think through your goals. There are three benefits to this. First-he or she will walk you through your goals and help you chalk out a roadmap to getting you there withreasonable certainly. Second-the saving and investment recommendations will come from an objective party. Third, and most important, the discipline of evaluating your portfolio at regular intervals and aligning the market movements to your goals and asset allocation will significantly improve the performance of your investments.

As long as you ensure that the planner’s and your objectives are aligned well, your overall portfolio will perform better than if you were managing it on your own. Failing to define your life goals and planning for the future is perhaps the biggest financial mistake you can make. Yet many of us overlook this aspect simply because we are procrastinators.

Here are a few things I would like all women to start doing right away:

1. Note down all assets, including properties, bank accounts, insurance policies, mutual funds, stocks, deposits
2. All investments must be in either or survivor mode, so you or your spouse can redeem the investments when needed.
3. Make a list of liabilities. This would include home loans, car loan, student loans, personal loans or any loans given or taken from friends and family. Ensure that all liabilities are covered by insurance. This will ensure that in case of the spouse’s death, the liabilities can get paid off
4. Ensure that credit card debts are paid off at the earliest, since these attract one of the highest interest rates in case of default
5. Ensure you are the nominee on your spouse’s life insurance policies, unless the policies are meant specifically for parents/others
6. Buy a medical insurance policy for yourself. The longer you delay this, the less likely the insurance company will cover you (because of age and health-related factors). It is not prudent to depend on your company for life and medical cover, since this will cease when you leave.
7. Make a list of all login IDs and passwords for banks and demat accounts, locker documents and keys
8. Know where all the financial documents of the house are kept, file them neatly. Keep copies of all your important paperwork
9. Keep a record of taxes paid, whether personal income tax or property tax