Truth be told, sometimes there are few guarantees in a marriage. This holds true now more than it did for the generations before us. If you are going down this path any time soon, it is best to face up to a few issues beforehand. You have to address money matters together. Whether you marry early in your 20s or later in your 50s, the last thing you need is to get blindsided by your spouse’s credit card debt or child-support commitments.
As unromantic as it sounds, this discussion needs to take place early, simply because it is the practical thing to do. Even if you are not in debt, marriage will link you to someone else financially. There are details that need to be addressed. Who pays the bills? How do expenses get divided? Will you have joint accounts? Below are a few pointers towards helping you address some of these issues.
Talk about money, disclose everything: Figure out your spouse’s spending and saving philosophies, and her long- and short-term financial goals. Make sure that you’re both on the same page, or at least have similar views. Talk about all existing debts and commitments. Remember, from here on, nothing is personal. A commitment can only be made when all the facts are known. You’ll be surprised at the number of marriages financial infidelity has wrecked globally.
Set up bank accounts: In the UAE, I would say set up independent bank accounts for each of you for salary transfers, and a joint offshore savings account. Joint credit cards are always a great idea to discourage impulsive spending. Make it a point to sit down once a month with credit card and bank statements. Have a conversation about spending if you think you have overdone it in a month. Remember, the goal is progress not perfection.
Set long- and short-term goals: This is more important than you think. Long-term planning should talk about where and how you would like to retire. It will address the number of kids you want to have, how you will pay for their education, how much you should save for this and so on. Short-term goals may relate to saving for a deposit on a home, or coming up with the capital for a new business venture.
Get insurance: Life cover, disability insurance and a critical-illness policy are all must-haves. These policies are cheaper when you are younger, so take action sooner rather than later. If there is any unprotected debt that you already have, get some life insurance in place for that too. Insurance is also a great tool to ensure that your kids go to school and university in the event that the worst happens during your younger earning years. On another note, home and contents insurance is something that isn’t too expensive and is a good thing to have, given that fires are not an uncommon occurrence here.
Make a will: I have stressed on the importance of a will in my previous column. Enough said.
Decide and invest together: Discuss debt, decide on which cards you will pay off first (the ones with higher interest of course), make a plan and stick to it.
The importance of budgeting: You need to be careful that you are neither too restrictive, nor too relaxed. Think of your daily needs as well as other expenses, such as haircuts, petrol and car maintenance, weekends, holidays and so on. If you have a smartphone or tablet, there are loads of apps available that will help you track and record your spending habits. Learn from the mistakes of the past.
Rickson D’Souza is director of wealth management at Pinnacle Insurance Brokers, Dubai. He can be reached on 04-346-8888 or firstname.lastname@example.org