Planning Your Happily Ever After – Savings and investments For Couples – FBNQuest
Love is the foundation of the happily ever after theory but money is an important structure that sustains the happily ever after. A study of more than 4,500 couples published in the journal – Family Relationships by Wendy Middlemiss, shows that money can be a predictor of whether or not a couple will have a happy marriage.
So, while love is one of the binding forces that glue a couple together in marriage, it is recommended that to sustain your happiness, you will need to build bridges, especially when it comes to your finances.
While discussing your short – long term financial plans can be one of the most difficult topics for couples, the vital practices to sustain regarding your marriage and finances are: Being transparent and honest enough to discuss your: current financial status; financial weaknesses and strengths; financial responsibilities; aspirations; career goals and long and short-term goals. This information puts you both on the same page, so you make financial decisions as a team that has the same financial goals.
Putting this in perspective makes it easier to plan, save or invest as a team. Regardless of how you decide to manage your finances, here are a few things you must consider as you plan your lives together as a couple.
Have ‘The Talk’ – A spouse is more than a roommate; you need to plan as a team for shared life and financial goals. Have conversations around who pays what bills, how much to save from the family income, the percentage to invest, where to invest etc. If both members have families to take care of, you decide as a couple what each family gets monthly. Couples need to decide details such as, whose paycheck will be deposited into the fixed deposit account and whose will be used to pay bills or to save for the future.
It is advisable to automate the payments, so you are not tempted. This is where your need for discipline shows up. You also need to consider various alternatives for planning, saving as well as investment opportunities available for couples.
Set Financial Goals together – As a couple, outline a short – long term financial plan but be flexible about these goals because things will almost certainly change. Scheduling a meeting with a financial advisor to establish effective long-term financial plans is an option you might want to also consider. The advisor can help you and your spouse by asking specific questions, getting you both on the same page and helping you consider your options as a couple.
Schedule Budget Meetings – Proper budgeting can help you avoid financial arguments by planning in advance. Don’t forget that you already had the talk and reached several consensuses as a couple. With that conversation as a foundation, plan for expenses, savings, and possibly a little discretionary cash for each partner to enjoy. Ensure you both have an equal say in the discussion and be willing to compromise as a couple.
Schedule this conversation regularly and include your financial advisor to help you solidify the best way to handle your finances. At this meeting, you both can discuss which bills need to be paid next, based on established schedules; where the budget needs to be tweaked (to meet possible changes in income or financial responsibilities).
This gives you a visual representation of how much money is available and what needs to be settled for in the near and distant future. While there is no one “right” way to handle your finances in marriage, one thing is for sure – you need to have transparent communication and an overall plan that both parties are aware of and happy with.
Consider Having Joint Accounts – As a couple, you might consider opening a joint account. Where you will deposit the income percentages you have already decided on. This joint account could act as a savings account where you save for the future, for projects and milestone life goals. You can have as many as you want and name each for what it means to you as a couple. You could start saving towards your children’s education, for a new house or for the business you intend to establish much later.
You may want to keep separate bank accounts for your spending, needs and responsibilities based on the conversation you had at the beginning to plan. However, consider having at least one joint account so emergencies don’t incapacitate you. It also might be a good idea to decide which financial institution offers better interest rates, so you save with a purpose.
Consider Investment Opportunities Available to you – Various investment opportunities are available to couples. With investing, there is no better time to start than the present and it’s never too late to start. Investments come in several packages and dimensions. At your scheduled meetings with your financial adviser, you can ask more questions for details on custom made plans. However, the following are opportunities you can take advantage of;
Mutual Funds: Mutual funds are investment products that allow you to diversify your assets and consequently, reduce the risks that come with investing. This is achieved through an investment market that pools your money with the money of numerous other people who have similar investment goals. You may need your financial adviser to come in and help allocate the fund’s assets and attempt to produce capital gains or income for you.
Stocks: These are shares of publicly traded companies you can buy stakes in. You will need your financial adviser to guide you based on your short and long term goals; as well as your risk appetites.
Bonds and Securities: Bonds are fixed income instruments that represent a loan made by an investor to a borrower, basically corporate or governmental. A bond could be thought of as an I.O.U issued to the borrower and includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations.
While these are just a few of the investment alternatives available to you, your financial adviser’s job is to help you invest wisely and ensure that you meet your financial goals as a couple and consequently secure your future.
Finally, always remember – There is no “cast-in-stone” methodology to manage finances as a couple. All that is required is to find your rhythm and to stick to it. Stand by the decisions you arrive at as a couple and be accountable to.