In my earlier piece, How a young couple can get rich, I spoke about how a couple decided to change their lifestyle once they put a goal in place.
Interestingly, I received a mail from a reader, let's call her Lata, telling me it just won't work for her because she and her husband were totally not in sync when it came to saving and investing.
She said he is just not interested in saving and insists on enjoying a lavish lifestyle. So it she who has to be sensible with her income while he plays truant with his.
Her question: How can I get him to save?
While I have no quick-fix answer for the above situation, I can only suggest a few guidelines as to what can be done.
Have a joint account
This is not just to instill a feeling of togetherness. It is tremendously practical.
Utility bills like electricity, phone, gas, rent and regular household expenses can be met through this joint account.
The key is deciding how much must go into this account. Must it be your entire salary or just part of it?
Entire salary goes into the joint account
Let's say both spouses put their entire salary into the joint account.
In that case, not only is this account to be used for monthly expenses and outgoings; it is to be used for investments as well.
In Lata's case, she will have to work it out in such a way that the investments are made before the money is blown up.
The best way is to draw up a rough estimate of how much the monthly expenditure would be. Let's say it averages to Rs 25,000 per month and both incomes amount to Rs 50,000 per month.
If the expenses amount to Rs 25,000 per month, a buffer of Rs 5,000 can be kept in the savings account to meet expenses. The balance Rs 20,000 must be invested.
The key is that it should be invested before it is spent. So investments that discipline, like recurring deposits and Systematic Investment Plans offered by mutual funds, are good options.
Recurring deposits require you to put in a fixed amount every month. Some banks offer this option; the money will be directly debited from your savings account into the deposit. Or, if you opt for a post office account, you can give post-dated cheques.
SIPs work like that too. A fixed amount is credited into your mutual fund every month. This too can be directly debited from your bank or you can give post-dated cheques.
Since these are medium and long-term investments, it would be wise to keep some of your savings fairly liquid.
So, if Rs 10,000 is invested in the above routes, the balance Rs 10,000 can be put in liquid funds and two-in-one bank deposits.
Two-in-one bank deposits are fixed deposits that can be broken anytime to meet expenses. You need not break the entire deposit, just use what you need while the balance will continue to earn the designated rate of interest. Let's say you have a deposit of Rs 10,000, earning 6% per annum. You need Rs 6,000, so you break the deposit and withdraw it. The balance Rs 4,000 will continue to earn 6% per annum.
This 'liquid' money can be kept aside for emergencies; it can also be used to meet expenses like your annual contribution to the Public Provident Fund and your life insurance premium.
Part of the salary goes into the joint account
What some couples do is have separate accounts. Since Lata did not mention what her situation was, let's deal with both instances.
Let's say Lata and her husband maintain separate accounts. It would still be wise to open one joint account where only part of each one's salary goes.
If, like the above, we estimate the monthly household expenses to be Rs 30,000, then each can put in Rs 15,000 into this account. The joint account, however, must only be used for running the household.
Then the couple can do what they want with the balance amount.
Lata seems to be very conscious about saving, so she would probably invest the bulk of it. And, even if her husband does not subscribe to her savings plans, he would contribute to the house and has money to spend as he wants.
If he is keen on saving a portion of his income, it would be wise if he opted for an investment that forces him to save, like the ones we mentioned above.
Start communicating
In most marriages, one partner usually plays the dominant role in managing finances. In the above example, it is definitely Lata.
However, what is necessary is that both partners communicate and discuss what they are saving for and what their goals are. As a couple, the implications will eventually be felt by both. When problems crop up, both will have to face them together.
So communication should be a priority. It is only right that each talk about their fears and the value they place on money and decide how to tackle it together. Keep in mind, learning how to manage money need not be a destructive force in your marriage; it can also be a positive one.