What’s Your Partner’s Financial Personality?
Finances are the foundation for the life you are about to build with your better half. No one should enter a marriage blindly without assessing whether this foundation is in place. Stash some time away to find out the following financial matters about your future spouse before you walk down the aisle. Financial personality, habits and aspirations often align with bigger issues. Do not be surprised if these conversations end up being more interesting than you think.
1. What is your money personality?
The first thing to identify is what your better half’s money personality is. Is he or she a spender or a saver? If you have been dating for some time, you might already know this about your partner. However, it is always good to discuss things more openly.
If you both are savers, it may blend well to achieve financial stability, however be sure you both do not hoard cash. As cash is subject to inflation, set your financial priorities right and put your money to work. Learn where you can invest with RM1,000 or RM50,000.
If you both are spenders, make sure you both are earning more than enough to cover both your lifestyle. However, make sure your spending do not exceed your income and create debt for yourselves. Learn how you can take advantage of credit card rewards to make spending smarter and to save money while you shop online.
Opposites do attract, but it could be quite tensed if one is a saver, while the other is a spender. They can still work together where the saver can draw the budget while the spender encourages everyone to enjoy the fruits of their labour.
As a couple, it would be best to discuss every saving or spending decision, to reach a compromise of a win-win situation. Agree to allow each other to have their own space to spend on things that they enjoy, such as electronic gadgets, or shoes.
2. Do you have any debt?
Find out how much debt does your future spouse have and also what kind of debt it is. There is definitely a difference between incurring a credit card debt due to over or unplanned spending, and a study or car loan.
Discuss whether you will share the responsibility of paying off the debt as a couple, or it will remain with the individual. See how this debt repayment will affect the added financial responsibilities of the marriage.
If your spouse has been incurring debt due to overspending or simply to support a rich lifestyle, then it should not be encouraged. Plan how you can clear off your debts faster than expected and encourage the habit of saving for smaller purchases and avoid impulse purchasing. Only large purchases such as car and house should go with debt.
Besides that, it could help to know if your spouse has any outstanding traffic offence fines to be settled. Not settling your traffic fines in time can mean that you will be imposed with a bigger fine, affecting your road tax renewal or face summons at court.
3. What is your credit score?
One’s credit score reflects their level of “financial responsibility” and this impacts their ability to apply for a credit card or securing a mortgage loan. If their credit score is low, ask them why. Did they default on payments because they overspent on a large purchase or was temporarily out of job? Checking your individual credit score can be done with CCRIS.
While your spouses’ credit score does not affect your credit score as it is accessed individually, but it will come to play a role if you intend to apply for a joint mortgage loan to purchase a house as a couple. In such a scenario, it is important to identify and find ways to improve your credit score, for the benefit of both.
4. What and where are your assets?
Find out each other’s assets and where they are at– whether in a unit trust, stocks, property, or in the form of cash in savings, fixed deposit, or covered by insurance. This will help you identify if your spouse is risk-averse or not.
Also identify if you both want to maintain separate individual savings account or intend to create a joint account for family related financial matters.
Finding out both your debts and assets, will help you identify what is your net worth. Also, in times of emergencies, you will know where to look for funds. For this reason, it also good to categorise your combined assets according to the ease of liquidation.
5. Do we want children?
Having children can be expensive. That is why it is important to not only discuss how many you would like to have, but also how will you cater for the financial responsibilities that come with it.
First, comes the expenses of child birth – a caesarean operation at a private hospital could cost up to RM10,000 with costs of being admitted and medication included.
Second, comes the responsibility of bringing up the children. Will the wife or husband be a stay-at-home parent? If so, will it be a temporary measure or permanent? How will you manage the family with only one person’s salary? Or will you resort to babysitting? Babysitting for one child can range from between RM600 to RM1,500, depending on the location, age, needs and number of hours. Or are you planning to send your children to their grandparents?
Thirdly, how will you cater for their basic and education needs? You will need to ensure they are adequately insured for times of emergencies and save up to see them through a basic university education. A basic business degree costs RM40,000 locally and RM200,000 overseas. It is important to gauge how much you will need and what are the savings avenues that you need to take advantage of.
6. What are your future financial aspirations?
This is important to identify as it will help determine the kind of lifestyle you both aspire to have. It could be a RM20,000 salary target, a senior manager promotion, purchasing a property at RM600,000, driving an Audi car, an annual overseas trip, retire by 55 with RM600,000 and so on.
Once you have identified your financial aspirations as a couple, you need to calculate how to realise them. Will you both be able to afford this? If not, what adjustments will you need to make? You may have to increase your income or lower your expectations.
By knowing your spouse’s financial personality, you can draw a plan for your financial future as a family and know what to do in rainy days. It is all about setting targets and planning how to set aside money to do it. Always have a plan B in case your first plan does not materialise. That way, you will be better at executing your financial goals and probably achieving them in time.
If you are already married but never discussed these issues, it might not be a bad idea to start asking them now by holding a monthly or weekly financial nights. You can help each other achieve these goals and start learning how to make sacrifices for one another. It is for the family after all and this can be much more romantic than it sounds!