Financial Conversations That Are Worth the Effort
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
From estate planning to investment strategy, it’s critical for you and your spouse to understand how the other feels about money
Ask couples that they most often disagree about, and there’s good chance the answer will be money. And at the root of many of these arguments is a lack of communications. Even though it can sometimes be challenging, and while the specific financial matters that most concern couples will ebb and flow throughout life, all spouses should plan to have these five important money conversations regardless of their age, income, or goals.
1) What financial assets and liabilities do we bring to our marriage (and how do we handle them)?
Couples who plan to marry should talk about what assets and financial obligations each brings to the relationships and how they’ll deal with them as spouses.(Ideally, this talk will happen before tying the knot.)The more you each bring to the relationship-in terms of assets, debts, and even children-the more crucial it is to have a financial plan that suits both of your interest equitably before you wed.
2) Who will manage the different aspects of our financial life?
If one spouse is comfortable managing investments and the other prefers to handle the monthly budget and bills, for example, it’s fine to divide tasks and designate household financial duties based on your individual strengths and weaknesses. regardless of how you assign who will handle various aspects of your finances. Spouses need to make a standing date at least once a quarter to review finances together
It’s important to meet so you don’t start to wonder what the other is doing. You don’t need to know everything about a stock or bond if you’re not the spouse who chooses where to invest the money. But you should know the process your spouse uses, where the money is, and who is managing it.
3) Are our goals aligned?
The financial goals you set as a couple have to be shared and agreed to as you move through life-especially if you have different financial personalities. Goals give clarity to what is reasonable (or not) and where you may need to agree for making adjustments to reach them.
Even beyond goals, you should discuss financial priorities. If saving is important to you because you’ve been through money struggles in the past, be open and share that concern instead of silently worrying that your partner is more of a spender.
4) What accounts and financial products do we have?
Major life events like births or job changes tend to remind couples to check their finances and beneficiary designations. Yet you’ll also want to talk about even small changes to spouse’s banking relationship, account username, and passwords. In addition to the quarterly check-in about household finances, Couples sit down at least once a year to discuss the details of all their financial accounts, benefits, and insurance policies they may hold-individually, though an employer, and together.
Asses where the accounts are, how to access them, who manages them, and what they cover (in the case of insurance policies and similar products).
Both spouses need to know what benefits each has at work, including stock options, life insurance and disability insurance policies. Both need to understand how things function in a worst-case scenario.
5) Is our estate plan current?
Estate planning is one of the easiest things to ignore when you’re busy, especially if you’re younger and in good health, but it’s incredibly important. If one spouse dies, for example, the other is instantly faced with decisions that have long-term ramifications. You need to both be prepared for what’s happening and will happen: Who are the advisors, and what is the game plan in case of an emergency
In addition to making sure that children and assets are properly accounted for in estate plans that having regular estate planning conversations can also reveal needs to protect against risk associated with investments, property, and businesses with products such as liability coverage or umbrella policies. Ultimately, the goal is to protect both partners from financials loss or hardships before the unexpected happens.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
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