Financial planning in relationship

I have done intensive research on dating, relationship, marriage, family and divorce. I found many problems caused due to misalign thoughts, individual habits, miscommunication, inappropriate reaction, recklessness and not listening. Most of the issues can be resolve by consulting experts or self taught books. But one of the key factors for most problems which many did not mention is money. This brings me to write about financial planning in relationship.

Planning is very important in relationship, especially when you started dating, going into marriage life and having your own baby. There is a lot of mental preparation required and many changes to both partners' lifestyle. One of the overload agenda is often financial planning. I bet you have heard these a million times.

"We don’t have enough money to buy that house."
"We can't afford to go Europe holiday."
"We don’t have enough left this month to pay our mortgagees."
"Why we have to sell our car?"
"Am not earning enough to meet our ends."
"Honey, we have to downsize our house."
"I need to take up a 2nd job in order to pay our monthly bills."
"We have to cut our budget for wedding dinner."

Sounds familiar? It may have happen to you before or going to happen in your near future. It’s alright, as this is a very common issue on bread and butter which many couples are facing. With a good financial planning that would make it the last thing to quarrel and affect the whole relationship. And this financial planning in relationship should start as early as dating.

Why financial planning in relationship?

Beside being sensitive to what your partner needs and communicating effective, being able to provide what you financially able to afford is equally important. And can avoid a lot of problem in the long run. The quickest way to do a financial planning is to list out your current monthly expense and income. A typical list may look like this

Monthly expenses for a guy who started dating
Hand phone bill $80
Room rent $700
Transport $200
Food $400
Clothing $100
Study loan $200
Tax $120
Total $1800

Monthly income
salary $2200
Stock dividend $80
Total $2280

The above seems to be a normal looking income and expense with $480 extra every month for saving or adhoc expenses like gift or festive dining. But when the dating starts to go into marriage stage and the expenses will start to increase. A ball park figure on wedding ceremony and dream house would be 10k with a monthly house payment at $1.8k. This works out to 22 month to save for the wedding and additional $1.1k for the new house which U can't afford and have to take up additional job. And if kids comes along, further expense on genealogy and kids expenses comes in.

As you can see it is wise to start financial planning early and highly encourage couples to talk about it during dating as it gives both parties a vivid picture for the future family lifestyle they can afford.

Get out of the rat race?

There is 2 ways to achieve the dream family lifestyle that you both wan to achieve.

One. To priorities your expense and downsize to fit your affordability.

Two. Increase your income by pursue a career prospect and invest your saving for greater returns.

For method one, you need to sit down and communicate properly without causing stress or discomfort to your Partner. At all times refer to cost and affordability in the long run. As a rule of thumb all expense should be at most 80% of your income. The lower percentage the better as you can use more of it in saving or investment. Please see some example below.

Downsize to a smaller apartment with option to change better when kids comes along.
Get a cheaper car
Spend on items during sales or promotion.
Try cook more often then dining outside.
Do regular maintenance on equipment and future to make them last longer
Recycle. Reuse. Reduce.
Use energy saving electrical appliances to use monthly bills
Option for a cheaper wedding location and accessories

The list is endless and suggests both parties to explore alternative if excessive spending is an issue. After all wedding is just an event; more important is the remaining days that the couple have to spend quality time together.

Method two is more personal as it involves career planning. Some may more to better pay job while others may set up business doing what they like. For investment using saving below is some suggestion.

Buy stock that pay dividend
Invest in unitrust
Forex trading
Property investment
Gold and precious metal
Franchise

Once you able to spend within your means and invest for future, relationship and marriage would be financially affordable and money would be the least problem to start a quarrelling session.

There are a few things that you have to be prepared once you got your financial planning in place.

Always set aside enough saving that can last you 9 to 12 months if you are out of job.
Always diversify your investment so to limit your risk and achieve maximum returns.
Always manage your time to balance between family and work as time is precious as well.
Always communicate together with your partner on financial planning.

In any relationship, from dating to marriage to kids, your expense will change and your income will grow as well. Therefore always revisit your financial planning by redoing your expense and income list in every different stages of your life.