The Complete Guide on Financial Planning for Couples

Last Modified on March 24, 2020

Being in a relationship can be rewarding and yet challenging in many ways. As a couple, you decide to share the burden of emotional, physical, and financial high and lows. Managing your finances – individually or jointly can be a task. You and your partner may have differing views. This is why financial planning for couples is extremely necessary.

Step by step guide on Financial Planning for couples

1. Assess your net worth

Before making any major financial decisions, it is essential for you and your partner to assess your net worth, both jointly and separately. Take into consideration your bank statements, credit history, insurance plans, and current investments. Next, subtract your debts and liabilities. This is an effective way to arrive at your current net worth. Thereafter, figure out which assets can be combined, and which assets are stable when separated. For instance, having a joint account is a sound way of contributing equally to common interests like day to day expenses, purchasing property or funding your child’s education. But, if you have a credit card debt and your partner has a loan, it is advisable to keep your accounts separate, as joining them would entail shared liability.

2. Review your financial goals

Financial planning for couples makes it crucial to review your financial goals from time to time. Goals can be classified into short term, medium-term and long term. Short term goals would include achievements like buying a car, purchasing home appliances, etc. A medium-term goal could include saving up for a vacation. And a long-term goal would include saving up for retirement, securing your family’s future, etc. It is your responsibility to analyze the amount of financial attention each goal requires and eliminate your expenses on unnecessary desires. Discussing your goals will help you evaluate the exact amount of money you need. It will also help you sort out your needs and wants. Moreover, it will lead you to develop a strategy for financial management.

3.  Secure your finances

Securing your finances at every stage of life is incumbent so that you can avoid a financial crisis and deploy your income in suitably fruitful avenues. Securing your finances does not just include saving a portion of your income in bank accounts, but also involves factoring in the number of risks you can afford as well as developing ways to cover any losses arising from them. The textbook method of cushioning your financial assets, after minimizing expenses, is by purchasing suitable insurance. Insurance plans depend on two factors:

1. The type of family – nuclear or joint
2. Work status – self-employed or contractually employed

Insurance plans cover medical and health expenses, any accident or disability costs, as well as death. Some insurance plans also cover real estate and household costs. It is advisable to consult a financial advisor or agent, to buy insurance that is most suitable to your needs and income capacity.

4. Monitor your investments

Apart from securing your finances, it is important that you focus on investing and building assets. Keep in mind that linking your investments to your goals will bear valuable results. Strike a balance between accounting for time, factoring inflation and adapting to market risks. Ensure that the assets you are investing help you beat inflation and increase your return rate in the near future. There are several calculators that will help you understand the impact of taxes and inflation on your investments. You can pick from investment areas like equity, debt/mutual funds, bonds, stocks, or a private or publicly held business. Traditional investments would include arenas like the gold or diamond market and real estate. After deciding the field of investment, you need to decide whether you prefer sole or combined ownership of your stakes. You can seek assistance from a financial advisor to help you pick and monitor your investments.

5. Calculate your taxes

Calculating your taxes after devoting time to securing your finances and building your assets is a foolproof way of maintaining stability of your finances. Taxes can be classified into three sections – tax payment, filing of returns, and tax-saving investments. It is better to take the help of a professional advisor and sort out your taxes at the beginning of every financial year so that you can take advantage of possible tax exemptions or deductions. An advisor can also help you decide whether to file a joint or separate tax return. Keeping up with changes in tax rules is also essential to ensure successful financial planning for couples.

6. Track your spending

Tracking your spending is one of the keystones in financial planning for couples. It is easy to get involved in the daily cacophony of life and lose track of your spending. You must consciously endeavor to distinguish your present and future requirements and allocate your income accordingly. Formulate a budget and decide if a joint or separate contribution is required towards maintaining the budget. Give your partner the space to manage their personal spending along with balancing combined designated spending. Tracking your finances also helps you save more for your needs and spend less on frivolous things. It helps you steer clear of monetary losses and translate your hard-earned money into financial gains.

To sum it up

Although financial planning for couples is necessary, staying financially aware and up to date with current trends and markets is equally important. Being well informed and cautious is cumbersome at times. It may be better to look for someone with ample experience and reliable credentials, to guide you through the entire process.

Are you struggling with financial planning as a couple? A simpler way out is to consult a financial advisor. A professional financial advisor will provide you the specific information you are looking for in consonance with your location, net worth, and portfolio.