February 8, 2022

Financial Compatibility Between Couples

Kalpesh Ashar

Founder, Full Circle Financial Planners & Advisors

Times have changed and today both the partners i.e the husband and wife are responsible for the family’s finances in their day-to-day life and in planning for their future financial goals as well. It is very important to understand that in today’s time, there are lots of FINANCIAL expectations a couple has from each other besides their love, bonding, and family.

If these FINANCIAL EXPECTATIONS are not addressed in a proper manner it can lead to a whole set of problems that can damage a relationship as well as the Financial Profile of the family.

So as personal finance professionals it becomes imperative for us to guide our clients w.r.t to discussing finances with their spouse or with their future partner. Do keep the following points in mind whenever you are having a conversation with your client and encourage them to have an open conversation with their partners when it comes to discussing their finances.

But what is FINANCIAL COMPATIBILITY?

Apart from the conventional Kundali’s which are generally matched prior to marriage, having good financial compatibility does not require an astrologer or Pandit for its success. It is between the couple who need to do it once they decide to be together and is approved by their mutual agreement. The institution of marriage is built on the 4 pillars of truth, trust, companionship, and most important honesty between a couple.

So the next question is what is the right time for the couple to start discussing their finances? In most of the cases it has to be in the:

Courtship / Dating Period

It is obvious that during this period the boy tries his level best to impress the girl and there is a chance that he might go a bit overboard with expenses, but reality should sink in as early as possible and it is at this foundation stage of the relationship that the true financial picture whether good or bad should be disclosed to each other.

This level of maturity is a must at this stage – if this bridge is crossed at a very early stage of a relationship, the couple knows each other’s financial strengths and weaknesses and will continuously work on building their finances around it.

Then, we obviously have the second scenario which is the conventional arranged marriage in which the families are involved :

Family Arranged Marriage – Pre-engagement period

Many important financial aspects can be discussed during this phase as it is still ONE STEP before marriage!

• Present earnings of both members
• Spending habits (whether conservative or aggressive)
• Whether they have the habit of saving and investing regularly?
• If one of them wishes to pursue an education course before or after marriage?
• Existing Liabilities like loans, personal repayments, etc.
• Their respective family’s financial status…
• If the prospective husband and his family will allow the girl/wife to continue working professionally or if she wishes to pursue a profession post marriage?

There should be clarity on these aspects, especially on the point of the lady working after marriage and it should be the husband’s initiative to encourage her to fulfill her professional goals if she wishes to. Like the first point as mentioned above, it will be great for the couple, if at this stage many money and career-related points are discussed and sorted out.

Now obviously the Third and most important aspect will be – POST Marriage (and now there’s no looking back)

Yes…of course the most important stage of life and how couples start interacting with each other with regards to their finances depends on 2 factors:

1) Past experience of their maiden family behavior with regards to Money.
2) The level of trust the couple has mutually between themselves.

So, which brings us to the most important question – What are the trouble areas or financial mistakes a couple should NOT make?

There are certain financial mistakes which should be avoided or a certain effort should be made to clarify these points at the earliest. Most of them are due to different psychological reasons. Thus, our job as a professional is to reduce this as much as possible and include both partners while discussing the finances of the family. Some mistakes which couples commit are –

• Hiding the real Income – Many husbands don’t feel like disclosing their real income due to various reasons i.e sometimes trying to dissuade the wife from spending more or sometimes just to inflate their own ego.
• Taking individual financial decisions – One of them (mainly men) may think their partner need not know or are not capable of understanding financial products or their decision to take them.
• Taking loans and lending to friends and not informing their spouse – Doing so without consulting the spouse and understanding your financial status can cause problems.
• Sudden job/business shift decisions – Without giving much thought and sufficient time to make this decision can be disastrous for the family.
• Business liabilities – If there are ongoing business problems and liabilities to be repaid – it is necessary that the wife is at least aware of it.
• Defaulting on credit cards – Unwanted expenses done by one member through Credit Card and the inability to pay them on time can be a big problem on the family finances.
• Financial Goals not aligned with each other – This can be a major setback for the future of the couple as it is necessary for both the members to have their focus and finances to achieve their short-term and long-term goals in achieving them.

Thus to sum it up:

Lack of communication, clarity, and most importantly honesty about a couple’s existing financial status might harm their relationship and also negatively impact their financial profile. The key to achieving Financial Goals is to take them together in the journey and help them to work together jointly as a team and as one unit with full positivity and great intentions.