Money is an integral part of our lives. Based on our circumstances, our experiences, our education etc., we develop certain attitudes and perceptions about money.

Some of us may be reckless spenders and some too stingy. Some may be good investors and some not so good. Some may be highly money minded and some least concerned about it. Some of these perceptions may be good and some wrong.

And, money is also an important parameter in our relationship with our spouse, apart from the other aspects in life. Therefore, the attitudes and perceptions that both partners have about money, play a very significant role in how the 'financial relationship' between them pans out.

If the partners have 'financial like-mindedness' then this relationship can be very enjoyable. Else one can have a potent source of conflict, which can wreck relationships.

Therefore, just as with other issues, the partners need to 'work' on developing a healthy financial relationship.

Understand your partner's financial behaviour

Have you have given a serious thought to your spouse's outlook towards money? To his/her feelings, beliefs and attitudes? Or tried to understand the motivations and apprehensions behind his/her financial behaviour? In 8 out of 10 cases the answer would be 'No'.

Therefore to start with, think -- Is your spouse comfortable with money or is insecure about it? Is he/she a spendthrift or a miser? Does he/she keep detailed accounts or is careless about money? What are the saving patterns? Etc.

Having mapped your spouse's financial conduct, match it with yours. And you shall have a fairly clear idea of the areas where you both generally tend to agree as also the points of differences. This becomes the starting point to developing a healthy and positive financial relationship with your partner.

Talk about money

Have an open and honest discussion. Express clearly your thoughts and perceptions about money. Listen patiently and objectively to your spouse's beliefs, concerns, ideas.

Both need to appreciate each other's good points about the financial behaviour, while the shortcomings & concerns should be handled maturely. The strong points should be strengthened and the differences ironed out.

It is the lack of communication, which usually aggravates the differences of opinion and can later lead to some serious problems. High-value purchases, important financial decisions, large investments etc. should be a joint effort. Consulting each other is necessary. Taking such decisions unilaterally can seriously undermine the relationship.

Budgeting and investing

Having understood each other's financial outlook, we now need to go down to the actual business.

The first step is to jointly evaluate your financial situation -- the incomes, the expenses, the liabilities, the assets etc.

Next, work out the financial plan

• How much you can allocate for household expenses? How will it be financed? Will you pool your incomes or keep it separate?
• What are the long-term goals -- house, car, children's education? What amount should be invested? Where? For what period?
• How much money should be kept aside for emergencies?
• What should be the retirement plan?

Having agreed upon an allocation plan, you need to put it in practice and then monitor it regularly. The short-term expenses could be reviewed say once a month. While the long-term investment say once a quarter.

One important point. Every member in the family will have some aspirations. We all love to possess the goodies in life. The man may desire the latest gizmo, the wife a new designer dress, the children a new toy or bike. You will need to priortize and make room for everyone's desires in the budget.

These efforts will go a long way in making your financial future secure and happy. It will reduce arguments on what to buy and what is not affordable; what is wasteful expenditure and what is useful; which investment is good and which bad.

Give each other some 'money' space

We are all aware of the need for a personal space in any relationship, including marriage. The same holds true for money too.

Therefore, it is extremely important that the husband, the wife and the children should have some small amount to themselves, which they can use in any manner they feel good about -- splurge, save, donate etc. -- without feeling guilty or having to justify it.

There should be a so called 'no questions asked' amount allocated to each one in the budget, which one need not explain or account for.

Who will manage the money

Usually, the man considers himself as the boss of the house and more often than not, it is he who manages the money. This could be due to him being the bread-winner and the preconceived notion that he is better at finance than the woman.

There is need to break these stereotyped beliefs. It may be possible that the man has better bargaining skills. And the wife is more rational and objective when it comes to investing money. Hence, the man may be better suited to handle the day-to-day household expenses and the wife in managing wealth.

Examine each other's expertise and then decide who will do what. Divide the work according to the skill. Keep each other informed about your decisions/actions. While the money management may be divided, the overall financial picture should be clear to both of you.

How wealthy you are is not important. Important is how you both manage whatever you have. Important is how you both enjoy spending it together. Important is how grow your wealth to fulfil your bigger dreams. Important is how both deal with financial emergencies. And for all this communication and building-up financial compatibility is a must. A financially happy and secure future is a team effort -- not a one-man (or one-woman) show.

The author is an investment advisor. He can be reached at smatai@hotmail.com.

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