financial planning: 7 bad financial habits of husband or wife that impact house finances: Here’s what to do about it

Much of the romantic magic created on Valentine’s Day is driven by money, but ironically enough, any discussion on finances is the farthest from the lovelorn couple’s minds. In fact, the entire courtship period before marriage is an exercise in knowing everything about the person except his financial personality. Yet, it is one aspect that can make or break your relationship as well as your finances.

A partner’s attitude towards money— spending too much or being too frugal, taking too much debt, lying or not sharing financial information, even imposing restrictions on spouse—can not only lead to conflicts, but also disrupt the household budget, impact long-term financial goals, even leaving a spouse destitute if the marriage breaks down.

“We adopt our attitudes and behaviour towards money through childhood experiences. So if you grew up poor, you might be overly stingy, constantly saving for a rainy day, and if you grew up with abundance but do not have that high a salary, you might be an overspender,” says Dr Prerna Kohli, Clinical Psychologist and Founder, MindTribe.in.

Does this mean these traits are hardwired in a person and nothing can be done to resolve issues, or can one alter these financial characteristics in some way? “Though one can take counselling, people seldom change and some of the attitudes are difficult to alter,” says Mrin Agarwal, Founder & Director, Finsafe India.

Still, some of these can be corrected if the partner is made to confront the financial import of such behaviour through effective communication. “Mostly, people tip-toe around sensitive topics with their partners for fear of hurting them, but every time they do not communicate, they harbour feelings of anger and resentment. So partners should put their need to feel financially or physically safe ahead of their need to protect their partner,” says Kohli.

If you, too, are caught in a situation where your partner’s spending, saving or investing aberrations are causing a dent in the family’s finances, we will tell you how to deal with it in a way that the issue can be resolved without disrupting the relationship. In some cases, however, it may be difficult to do much, and you should try to protect and prioritise your and your children’s financial well-being by taking hard decisions. In the cover story this week, we list a few traits that are causing friction in your finances and offer suitable remedies.

1. Being an impulsive, extravagant spender

This may seem to be the most innocuous trait in your partner, but can be extremely disruptive for your budget and financial goals, besides being a point of constant conflict in the relationship.

Excessive spending could spring from a variety of reasons: too much restraint in childhood, emotional stress, coming into a lot of money suddenly, financial freedom on getting a job, or trying to keep up with one’s affluent peers, among others.

“When it comes to kids, my husband can’t help spending as he wants to provide them all that he never had as a child,” says Prerna Nandy, a 35-yearold financial analyst. Other spouses splurge on clothes, electronic gadgets, cars, among other things.

This often translates to a skewed budget and financial shortfall by month-end. The bigger fallouts of impulsive and large spends can be inability to save for important financial goals, or not having money in case of a contingency.

What can you do?
You can try various ways to counter your spouse’s spending addiction. The first, of course, is to communicate about the problem. “The most effective way is for the spouse to do the actual math, calculate how much monthly savings and investments are required to achieve long-term goals and how much is left after the essential expenses and investments,” says Agarwal. When confronted with facts that ensure financial safety of kids or one’s own retirement, it is difficult to go on spending binges.

Another way is to automate investments and bill payments so that the money is deducted from bank account as soon as the salary arrives. You could also enlist your spouse’s help and let her be in control of the monthly budget, wherein she gives you only the money needed for specific expenses or bills.

2. Taking too many loans, or using spouse to do it
For a generation that has grown up in the ‘buy now, pay later’ milieu, buying everything from a house and car to furniture on loan, has become passe. “Applying and receiving loans has become easier, with flexible repayments and consequences that are not so dire, the worst in most cases being a bad credit score. Combine this with the desire for luxury goods, where the purchase releases dopamine into our brains, making it an addictive habit, and it’s no wonder people are going overboard with loans,” says Kohli.

Yet, there are downsides to taking too many loans, especially large ones, where the combined EMIs exceed 40% of your income. In expensive ones like personal and credit card loans, where the interest rates are high, the likelihood of falling into a debt trap is also high. If your partner is the only earning member in the family and he has taken several loans, it can not only threaten your current lifestyle, but also the future financial situation if debts spiral out of control.

If he loses his job, or suffers a salary cut or business losses, he may be unable to repay and the interest burden can escalate, or your assets can be seized by the bank to repay the loan. Besides, the high interest rates mean that you end up paying more for the thing you buy.

A husband can also jeopardise his wife’s future by taking a loan in her name, be it for business or any other reason. If the husband is unable to repay or dies suddenly, the liability of repaying the loan will fall on the partner.

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What can you do?
It is important that both the partners are party to all financial decisions in the household, not only to ease the transition if one of the partner dies, but also because both need to be aware of and responsible for the liability they are undertaking. Both should consider their incomes and outgo to avoid stressing their budget with loans, and ensure that they are saving and investing for their goals before taking on liabilities.

Importantly, a wife should not blindly agree to sign documents or take loans where she is not the co-owner of the asset, or become a financial guarantor for her husband’s loans.

3. Lying, hiding financial information
According to an ET Wealth and Economictimes.com 2015 survey, nearly 39% people believe it’s okay to lie to your partner about money, with one in four lying about their incomes. “Most couples lie either to avoid antagonising their partner or protect their own finances,” says Dinesh Rohira, Founder & CEO, 5nance.com.

Men typically lie or hide information if they have incurred losses in investments or business, or have taken too much debt that they can’t repay, or while buying big-ticket items. “In joint families, where brothers are in business, husbands hide information especially when things go wrong or to avoid sharing family information,” says Rohira. In many cases, where one spouse has been in the habit of taking care of the family for a long time, he will stop sharing information if his finances start going downhill.

This certainly does not bode well for the spouse, typically women, who may either have to bear the husband’s liabilities if he were to die or go bankrupt, or take care of her own finances if the marriage were to break down.

Women usually lie when they have limited money to spend on themselves and buy personal things, or give money to their families, or to preserve themselves financially.

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What can you do?
“It is best to come to an understanding about finances before getting married,” says Rohira. Communication can be your best bet here. Have an open conversation about your incomes, how you want to spend and invest it, and which financial goals you want to frame. Ideally, you should retain your own individual incomes to retain financial freedom, and form a joint account where you can contribute for shared goals and expenses.

Women should also learn to be financially independent. “They need to be financially literate, take an active interest in family finances and be aware to avoid being ill-treated,” says Agarwal. So know where the husband is investing and whether you are a nominee, have assets either jointly or in your name, and retain your assets.

4. Being too lazy to plan, carry out financial tasks
A lazy spouse, especially if he is the one in charge of financial decisions and transactions, can be the bane for household finances as inaction can prove costly in more ways than one. Not paying the bills or filing tax returns on time can lead to penalties, while putting off paying insurance premium can make the policy lapse. Worse, not investing and saving at the right time can lead to a shortfall in goal values, and failure to monitor the investment portfolio or rebalance on time can result in losses.

“In another instance, where a partner loses his job or takes a sabbatical, he can get used to being taken care of and become too lazy to hunt for a job, which may increase the financial burden for the partner, especially if there are loans to repay,” says Rohira.

Not all inaction can be attributed to laziness however. “An important financial task can be daunting to the point that it can make a person procrastinate. Though it seems a person is being lazy, people procrastinate due to varying emotional reasons such as fear of uncertainty, loss, etc,” says Kohli.

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What can you do?
Laziness can be difficult to overcome if it is a part of one’s character, and impossible for a spouse to change it. One could, of course, try to lead by example and get the partner interested in financial tasks by doing it around them. It could also be done by getting the spouse to undertake financial planning jointly, putting on paper the implications of not doing a task on time. For instance, one can calculate how not investing on time for a child’s goal can leave the couple with no money for his education. Another empowering option is for the other partner to take charge of the financial tasks and accomplish them himself on time.

If it is procrastination one is dealing with, it can be addressed by having an open discussion about finances and giving the person time to address their fears and helping them get clarity, instead of pressuring them.

5. Spouse asserting financial dominance
It is common in households, where the husband is the only earning member, to assert dominance and take all financial decisions. This can mean holding tight control over spending by the spouse, not giving enough money for personal purchases or for running the household comfortably.

It could mean having all the assets, be it house, gold, or equity investments only in one partner’s name, leaving the other without any financial sustenance if the marriage were to fall apart. It could also translate into forcing the spouse to give her income if she is earning, or her assets before marriage, or forcing her family to contribute to their purchases, among others.

It’s a situation that can seldom be remedied to the advantage of woman without seeking a separation. It is difficult to change a person whose behaviour is rooted in conditioning since childhood, insecurities or inferiority complexes, or jealousy if the partner is earning more, which trigger these behavioural patterns.

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What can you do?
One option to avoid landing in this situation is to have a free discussion with your partner before you get married. Take your time to interact with your fiancé and his family, go on dates where financial behaviour, be it spending or saving, or the way he treats your financial preferences, or gives priority to your needs , is often revealed.

Also, talk openly about how you want to handle finances after marriage. Discuss in detail how you are going to split your finances and assets, who will undertake which financial responsibilities, and the monetary freedom you expect.

The other way to deal with it is to be fully aware of your financial rights, equip yourself with necessary information and demand financial equality in the relationship. If it is not accorded to you, it will be a good idea to separate or even seek divorce, before you land yourself in deeper financial problems.

6. Lending money to friends, contribution to family
A big cause of friction in households is when one spouse frequently lends money to friends or family members in need, without informing the spouse. This is a justified cause of resentment, especially if it comes at the cost of one’s own budgetary requirements or disrupted cash flow. Besides, the fact that such a loan is usually interest-free means that you are losing money that could be invested and could compound over time. The worst downside is that more often than not, the money is not returned.

Even offering financial contribution to parents can lead to conflict and monetary instability if one’s own needs are being sacrificed or financial goals are being compromised. The situation can be further exacerbated if both the spouses are earning, but the contribution is being made only to one set of parents, or if the husband resents his wife helping her family financially. If both the partners are earning, they may have a right to lend money, but doing it without calculating one’s own retirements can jeopardise their goals.

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What can you do?
A good option is for the couple to have an open discussion on their shared financial journey. They should formulate their financial goals, create a budget, clearly outlining the combined income, outgo, savings and investments needed for goals, as well as their disposable incomes. Once the essential expenses and savings are defined, they can take a joint decision on how much money they can lend or contribute to their families and friends. They should lend the money only if they are willing to write off completely.

If the money is given only on oral understanding without any arrangement for repayment, it is more often than not unlikely to be returned. It is, therefore, important to provide the money as loan to be repaid, and instead of a verbal agreement, it should be well documented and lucidly framed with the terms and tenure of repayment specified.

7. Investing erratically, making losses frequently
In single income households, where the breadwinner takes all financial decisions, including investments, it is not always possible for him to be adept at it. Yet, he may continue to invest either to retain financial control, or not to appear inadequate and unsavvy in front of his spouse and family. It could also be because he has no option but to undertake this responsibility since the partner does not take any interest in financial matters or is simply incapable of doing it.

In such cases, he may continue to take wrong investing calls and incur losses in the absence of professional financial advice. This can not only impact the financial goals but also upset the budget and cash flow.

“Some people end up making bad investments repeatedly. This is a learned behaviour that becomes a habit, even releasing dopamine into the brain and making the erratic decision feel like the most logical one,” says Kohli.

If the spouse is financially aware and capable of taking good investing decisions, but is not being allowed to do so, it can be frustrating to see the loss of money and unstable financial flow.

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What can you do?
The simplest option for an investor taking bad decisions regularly is to turn to a financial adviser. If, on the other hand, the homemaker partner is able and interested in investing, she should do it. It will not only make her a part of the financial decision-making process but also take the burden off the other spouse. Studies show that women tend to be better investors, so even though they take some bad decisions, they are less likely to lose money.

Another option is for the couple to take a joint decision. “A mutual call on investments ensures both are accountable for the outcome,” says Rohira. “Whether one is aggressive and the other conservative, or both are passive or aggressive, they are in it together and can deal with the situation without any blame game,” he adds.

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