How to Tying The Financial Knot
This article published in Maxxbride magazine November 2012 (Text by Irina Jusuf)
Adapting to life after marriage, its not as easy as we have
imagined. Many things have certainly changed from our previous life. Starting
from day-to-day habits, level of needs to a way of thinking that will
ultimately determine the basic goal of marriage itself.
Similarly, in financial affairs, a newlywed couples
should be able to put aside their egos and getting
used to combine their income for the household integrity.
Managing finance together after
marriage is going to be a challenge because it involves habits and ego of each
party. Is the husband gives authority of the entire income to the wife? What
if the wife’s earning are also
used to cover the family's needs? Is there a sharing of task and responsibility to pay the expenses?
That’s why the newlyweds are expected to sit together in planning their finances after
the wedding ceremony, to determine
the financial goals and to make a financial
plan based on priority and the
existing financial conditions.
According to Yosephine P. Tyas S.Kom,
MM, RFA®, Chief Consulting Officer & Senior Advisor at Ardana
Consulting, financial planning process in the family should started
with transparency so that both
parties are equal to know the actual condition of their spouse, if there are things that
look not healthy then it can be fixed as soon as possible, that's
why it's important to do financial check-up before
marriage. Improvements on the
financial condition could be done
earlier. For example, pay off credit card debt, prepare for an emergency fund, etc. If each party has started budgeting
before married, it will be easier
in marriage to determine which expenses are
primary and non-primary, priority or not a
priority, the personal needs or the investment for
family’s financial goals.
Yosephine says, after marriage, if there is no prenuptial
agreement, the asset acquired after marriage is joint asset. Asset allocation can be done according to the
needs of the family, if there is one
asset that is not optimal, it can be allocated to
other type of asset based on their financial goals that
already prepared in their Financial Plan.
To facilitate financial
planning process, they can make a joint account as a Operational Account Family (husband and wife may
transfer their income partially or
completely), account for Personal
Needs for each party (hobbies, work, etc.), account for the
Emergency Fund and account for Investment
according to their priority financial goals (such as: Home Purchase
Fund, Children Education Fund, Pension Fund).
So what if there are financial problems in the marriage?
Financial problems can occur if one of the spouse in
an unhealthy financial condition,
such as having consumerism debts. Yosephine suggested
that these problems should
be anticipated earlier, but if the problem known after they marriage
then this should be discussed
and not hidden because
it will only make the problem more
complicated. With open discussion
(without blaming each other) then
a solution can be found and done as soon as possible. To pay off debt,
especially consumptive debt, as a family the husband and wife should support
and help each other. They should do introspection
process, learn and change for better in financial planning.
To successfully build a harmonious family, couples should maintain financial strength they have. The financial condition of a family can be health
if they keep these important things :
1.
Emergency fund
Does the family have a special
allocation fund that could be used during an emergency? Emergency fund for married couples minimum is six times
salary or expenses, and the amount will be greater by the increasing of people
who depend on the family.
2. Liquid Assets
Liquid Assets are assets of high liquidity, such as saving. The amount in savings
should reach the ideal percentage when compared with the overall assets. Liquid
assets should not be too small, but also not optimal if it is too big.
3. Saving
A family should have an allocation of savings each month minimum 10% of the
income.
4. Debt Installment
Make sure that the total debt installment is not greater than 35% of the total
income.
“If you have fulfilled all the above points, it means that your financial
condition mostly healthier than many people outside,” Yosephine said.
to be continue (Do's and Don'ts in Financial Planning for Marriage)
Image taken from here
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