Simple tips

Here are some tips for you and your spouse to be on the same wavelength with regards to money:

1. For Singles, Choose Your Life Partner Carefully!  

When you are in love, your heart and hormones often take over the head. While being in love is a fantastic feeling, it can blind you and get you in trouble later due to personality, lifestyle and other differences. Hence it’s advisable to have some time apart on a regular basis to evaluate if your relationship is heading in the right direction.

With regards to money, choose a life partner who has similar goals and values as you. Support and encourage each other as you both work towards financial improvement. When combining finances with your partner, communication and honesty are extremely important.

2. Set Aside Specific Time Once a Week to Sit Down and Discuss Your Finances

By setting aside this special time, you are showing that you are willing to take your financial situation seriously and tackle any challenges together.

As a couple, it is important to face important financial issues like debt, savings, disagreements about spending and investments together. This can be hard to do. After all, dealing with the issues oneself is difficult enough. So it can be even more challenging to do so as a couple due to differences of opinions about money and how it should be handled.

If you are unable to resolve any issues on your own, be prepared to ask for help –from those relatives or friends who have a proven track record of managing and investing their own money well. If privacy is an issue, seek out qualified financial planners or wealth coaches and be prepared to pay for their services. Be very careful of those who give free financial advice as their advice may be biased towards your buying their investment products or services. 

3. Be Flexible and Give Some Leeway to Each Other

While a 50-50 agreement on all important issues may be the ideal arrangement, it may often not be the best one. If one spouse is a slow decision-maker, often good investment opportunities may come and go because one spouse can’t give the green light fast enough. Hence it may be advisable for one spouse to take the lead and become the Financial Controller and the other stays a follower. However, it is very important not to keep the follower spouse in the dark on important financial matters.

4. Share Regular Updates on: Earnings, Spending, Savings and Investments

When you sit down to discuss your finances, break the issues into the above four categories. If you think about it, all of your financial issues can be put into one of these four areas. Once you have broken things down this way, it should be simpler to tackle each topic by taking stock of where you are and where you want to be.

Very often, the easiest method of increasing savings and investments is not by cutting back on spending but by increasing your income. For most couples, the maximum they can reduce expenses is only 10-15% without any major change in lifestyle. Hence it’s advisable to focus your time and effort on Earning More as the potential here is unlimited. By earning more and keeping your lifestyle unchanged, you can easily increase your savings and investments.

5. Agree to Discuss Any Major Purchases Ahead of Time

Most couples will have differing views on how to spend their money. These differences usually can be traced back to each person's Money Personality. Spenders tend to believe and act like money is for the spending, since life is short. Savers will feel that saving for the long-term future is the only prudent path.

One simple thing you can do is to agree that you will discuss any major purchase with each other ahead of time. What constitutes a "major purchase" will vary from couple to couple. This is a figure for you to decide. My suggestion is to stick to a figure (RM100, RM500, etc.) and agree to discuss with each other any purchases in advance that exceed this amount.

6. Set and Focus on Your Short (<1 year) and Medium Term (<3 year) Goals

The two most important lifetime goals for most families would be having sufficient funds for their children’s college education and their own retirement. While it’s good to have a rough idea where you should be money-wise 10-20 years later, it’s more important to focus on getting your short and medium term goals right. If you can accomplish 80-90% of your short and medium term goals, your long term goals will automatically fall into place.

For example, an easy and a “once and for all” method to take care of the funding for your children’s college education would be via property investments. You just  need to invest in a medium cost apartment in the RM150,000 price range in a good and easy to rent out (< 2 months) location the year they are born. If you qualify to get a 90% loan, all you need to come up upfront is approximately RM15,000. For simplicity, we shall assume that your rentals are sufficient to service your monthly installments. Eighteen years later, the apartment could have doubled in value to around RM300,000 and your outstanding loan of RM135,000 would have reduced by 75% to approximately RM35,000.

You can later decide to sell off or re-finance the apartment and use the funds for your children’s higher education. I believe this method makes a lot more sense than saving a certain amount every month and investing into some investment funds and then praying very hard that the funds do well 18 years later. How well the funds do ultimately depends on how well the fund manager performs and market conditions, both of which are not within your control. On the other hand for properties, I dare say that it’s almost a sure thing as long as the right property in a well established and easy to rent out location is chosen.

Even for your own retirement funding, you can also do likewise by investing in one property every few years.

Being on the same page about money is a cornerstone of any healthy relationship. By following these money management tips, you will have a much happier married life. Often, the biggest cause of disagreements and quarrels amongst couples is money and you will be able to avoid them.

If you have any comments on this article, please email to me at achievers88@yahoo.com. I would highly recommend that you sign up at our moderated getrichbook egroups at: