If you have been following the advice we have been giving in this column on how to make the best financial match, we believe you have wisely chosen a partner who is a good fit for you. If you share similar values, are financially responsible, and are willing to open up to each other and discuss finances in a straightforward manner, now is the time to embark on the exciting phase of living together as a couple and maximising your joint income.
Most people come into marriage while already financially independent. However, if you want to grow together in your marriage as well as expand your joint financial base, it is important to find ways and means of maximising your income by working together as a couple to ensure you make good savings and wise investments. Once you maximise your joint incomes, chances are that you will generate more cash than you will be spending because there are expenses that will be automatically reduced once you start sharing a home, such as rent or mortgage payment.
If you are able to spare some cash from your joint incomes, then it is time to start investing as a couple. You should be able to create an investment policy, which will guide you on where to put your money to give you the best returns. This could be through investments in assets, stocks or savings. When investing becomes a team sport, there are several ways to maintain harmony in your marriage while investing
in ways that are comfortable for both of you. Your marriage bond will also become stronger once you start discussing joint investments.
The single biggest mistake couples make is delegating that task of investing to only one person. The woman might say, ‘well, men are better at investments’, and leave all investments decisions to her husband. It is important for both parties to take an interest in their finances and investments, be responsible and also know what is happening so one of you can’t say at a later time, “Oh, I thought this was the plan.” You have got to be engaged and help make the plan so you aren’t surprised when things don’t turn out the way you expected.
Simply opting out of financial discussions and decisions is not fair to the spouse who is left to make all the financial decisions. It is easy to keep off family financial affairs and blame your partner if things don’t work out. You both need to make decisions together, or to agree to keep your investments separate and look after your own money, as long as the resulting income benefits the family.
If you are a woman, opting out can be a very dangerous choice as it is not uncommon for men to take advantage of women in financial situations. You may feel that your husband is genetically better equipped to invest than you are, but studies actually show that women are much better investors than men because they do not experience testosterone surges when making decisions. Men are known to take big risks, which sometimes may turn out bad for the family investments, whereas women are more cautious. Even if your husband is a professional money manager, you may have a valuable perspective to bring to the table. There are millions of ways to make money, and it is important that you are both comfortable with the investment choices you make as couple.
If the two of you have similar financial styles, chances are that you will have similar investment styles. If this is the case, it may be very easy for the two of you to agree on where your investments will go – real estate, savings, stocks, shares and so on. You will also easily agree on where to bank your money, types of accounts and whether they should be jointly held. On the other hand, if one of you is very conservative and the other is a risk taker, it may make sense to keep investment funds separate. This way, you will avoid disagreements because you are thinking differently. Or making a risk that brings huge losses or losing out on opportunities because of being overly cautious.
If the man is very aggressive and wants all the money put in stocks and the woman is very conservative and would like a much more balanced portfolio, you have a couple of options. You could meet each other somewhere in the middle and establish a compromise position or, you could keep your money in separate investment accounts and have a little fun comparing whose portfolio performs better. For example, the man may invest in the stock exchange, while the woman may choose the safer and more guaranteed returns in real estate. But at the end of the day, the couple will be investing separately for the growth of the family financial base.
As the joint heads of your family investment office, couples should meet regularly and discuss how their investments are doing, whether they are doing it jointly or individually. Make these meetings regular and fairly productive by having an agenda and bringing all financial statements and information so you can compare notes. Also use the meetings to discuss market trends and family needs so you can agree how to shift your assets or savings. Always endeavor to make joint decisions that you are both comfortable with, or simply agree to manage your individual money and put returns in the same hat.
Even if you decide to manage your money separately, you should meet and discuss your separate investment accounts with each other. Chances are that your goals are similar and you need to keep each other abreast of what is happening and help each other’s investment grow. You may help each other and learn from each other’s experiences. Just like in marriage success, communication is the key to joint financial success.
Together you can develop strategies for handling your money to make it grow and help you meet your long-term goals. For example, you can create mutually agreed-upon ‘stop losses’ for each type of investment. If an investment goes down by a pre-agreed percentage, you agree to sell, no matter what emotional attachment there may be. Some people are known to keep loss-making investments because of the emotional attachment they have to it. For example, you may be so attached to your cows that even when they bring losses each month, you are not ready to sell them and invest the money elsewhere. You can also agree on how often to rebalance your asset allocation and how to invest new funds.
By creating policies as a team, you will enhance your marriage as you grow your wealth.