Changes In Relationship Status And Its Impact On Finances

Everyone looks for companionship, intimacy, and friendship in a marriage, especially when they are made in heaven.

India has always been conservative towards discussing love and relationships. Life was a lot less convenient earlier and marriage wasn’t discussed openly. The elders in the family chose the groom who best suited the family’s virtues, sadly, their choice wasn’t always right. Dowry, female infanticide, and a myopic outlook towards the role of women plagued society. Divorce was frowned upon and many couples stayed together fearing society’s backlash. “Log kya sochenge” (what would people think) was “the” concern of many married couples that forced them to stay in an un-happy marriages.

Still, India has come a long way. Parents openly discuss marriage with their children, even giving them the liberty to choose their life partner. Parents are embracing “live-in” relationships too. Expectations are discussed openly with one’s beau. Career is a top priority for both and the man is expected to help in doing the dishes and the laundry. Society is evolving and the stereotypical roles are changing.

However, an often neglected part in the relationship is a discussion about “finances”. It is important to discuss the topic openly with your man. Women face specific issues like-social prejudices, longevity, gender related illnesses, pregnancy, caring for ageing parents or spouses, greater health care costs, etc. that require special consideration.

If you are planning to tie the knot soon, here are some simple actionable points to kick start your money discussion:
 

• Understand his money outlook: Understand what motivates your spouse about money. Why did he decide to invest in a particular scheme? Is financial security on top of his agenda? Or is he an active investor in the stock market? Share your views and aspirations with him too—this way he realizes your attitude and outlook towards money.
   
• Similarly, discuss what you owe—debt is a major cause for a relationship turning sour. Avoid jumping to conclusions. Understand the reason for him borrowing money—he could have borrowed to buy a house or for education, etc.
   
• What are your financial goals:Make sure you write down your financial goals and chalk out a road map that will help you achieve them. Financial goals help you make the right use of your money. Make sure you aren’t too conservative with your investments for long term financial goals.
   
• Most couples invest in their individual capacity. This creates a lot of problems on death or incapacity of the spouse. Wherever possible, invest jointly and add a nominee.
   
• How do you plan to share the expenses: You may open a joint account wherein both the partners would proportionately credit a part of their salary to meet the daily expenses
   

PersonalFN believes that owning a credit card is not a bad thing as long as you know the means to service your dues. As Dave Ramsey puts it, “Personal Finance is about 80% behavior and about 20% head knowledge”. There’s an old adage for financial discipline, “Live within your means” – follow it thoroughly.

However, life isn’t always black and white—there are grey shades to it too. There could be circumstances that force you to move on in life and part ways with your spouse.

In the West, couples get into a “pre-nuptial” agreement wherein the future partners disclose all their financial assets (including liabilities) and agree the terms of distribution of assets, including maintenance in case of divorce.

However, such agreements are neither legal nor valid under the marriage laws of our country. The judiciary doesn’t consider marriage as a contract. A marriage is treated as a religious bond between the husband and wife and pre-nuptial agreements have not found social acceptance.

Parting ways is never easy. It takes a toll on life and career, leading to a lot of stress. An amicable divorce is a prudent decision both financially and emotionally. Seek professional help to navigate through the rigmarole of the law.

 From a personal finance perspective:

• Make a list of your savings and transfer money from joint accounts to individual accounts,
   
• Assess the family debt and yours as an individual,
   
• Calculate the cost of running the house alone,
   
• Determine where you will be living after the separation,
   
• Avoid any major purchases till you settle down and
   
• Reevaluate your financial goals and restructure your financial plan
   

However, marriage isn’t the only relationship status that Indian society is reforming. We are experiencing a new form of cohabitation—live-in relationships. Metros, in the country are open to residing with a partner without tying the knot.

Although the Hindu Marriage Act, 1955 or any other statutory law does not recognize a live-in relationship, the Protection of Women from Domestic Violence Act 2005 provides for the protection and maintenance, thereby granting the right of alimony to an aggrieved live-in partner. There are no specific laws to define the status of live-in relationships in India, and hence the Courts have stepped forward to clarify their point of view. Having taken the view of a man and a woman live together as husband and wife for a long term, the law will presume they were legally married unless proved contrary. According to the Courts, such cohabitation may be immoral to the conservative Indian society but it isn’t illegal in the eyes of the law.

If you are in a live-in relationship, here are some personal finance tips:

• Don’t commingle your finances
   
• Don’t assign your life insurance policy to your partner—once the policy is assigned it will be difficult to reassign it, in case you move out of the relationship
   
• Buy separate health insurance plans
   
• Share the expenses on rational basis proportionate to the earnings of your partner
   
• Without any law in the country recognizing a live-in relationship, succession planning is the most difficult part for live-in couples. Making a proper Will with the help of a legal professional would provide respite to the partners.
   

Needless to say, it is important for all women - married, single, separated, widowed or divorced to be financially independent. However, remember that financial independence cannot be regarded as the same as financial security. A monthly pay cheque in your bank account alone cannot render you capable of meeting all your financial goals. How you plan and manage your finances will result in the fruition of goals later in life.

In the words of Ms. Kathleen Murphy, President, Fidelity Personal Investing, “In order to control your future and live the dreams you have earned, you also have to control your financial future.”


Personal FN        Issue Date : April 14, 2016