10 proven tips for couples to manage their personal finances smartly

When Pawan and Shivani Agarwal were introduced to each other by their families, they had very little in common.

Pawan, a second-generation businessman from Kolkata and Shivani, born in Jhansi, who worked in the field of education, came from various professional backgrounds, but eventually hit it off. Soon, wedding plans were in the works.

During their dating period, the two shared a lot about their respective work. About a year after seeing each other, Shivani was struck by a thought one day.

“I didn’t know anything about finance or investing,” she told The best India.

She adds that it was ironic because she had been financially self-sufficient for years. “The realization was a wake-up call for me, because even if I won, I had no financial goals.”

Pawan and Shivani Agarwal. (Photo: Pawan & Shivani Agarwal)

Financial independence: a dream for many young women

When Shivani shared this dilemma with Pawan, he was intrigued, but not surprised. Having been in the finance industry for years, he had come to a similar observation.

“I’ve met so many working women who didn’t really know how to manage their finances. Although they were earning well, they were not financially independent,” says Pawan.

The two were now united by a common fire, a zeal to find a solution to Shivani’s problem, and in turn, pave the way for women everywhere to understand their finances. The duo came to a consensus that publishing a book in this regard would make for interesting reading, as people could refer to it again and again.

So, unknowingly, the dating period turned into the writing phase of “The Little Book of Financial Clarity”, which was released in February 2022. Interestingly, the release of the book took place during their wedding, just after the baarat.

“This isn’t one of the regular personal finance books that overwhelms you with advice,” says Pawan.

On the contrary, what sets it apart is that at each stage of the book, there is a concrete activity and an action plan to follow. “It’s a complete package for understanding where you are, finding where you want to go, what you need to get to your destination, and some suggestions to help you get there,” says Shivani, explaining that you can think of it as a workbook that you can fill out for 11 days, each day focusing on one aspect of your finances.

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The “Little Book on Financial Clarity” was released at the couple’s wedding. (Photo: Pawan & Shivani Agarwal)

What makes the book unique is that it has input from both Pawan, who has a strong background in finance, as well as Shivani, who started out as a novice herself. Both explain what creates strong financial bonds between couples.

10 steps to personal finance

  1. Discuss your demons

One of the most important things, says Pawan, is to fully disclose your financial situation to your partner.

“It may be uncomfortable, but it’s a must.” Talking about debts, loans, sources of income, investments or other current financial assets or obligations is essential to a good relationship, he adds.

  1. Understanding Your Partner’s Money Mindset

Were your partner’s parents thrifty or spendthrift? Did your parents talk about money or was it a taboo subject? What is your spouse’s biggest fear with their finances?

Pawan says these are all details you need to know. “It explains a lot about how your partner views money,” he adds.

  1. Fix your eyes on the same prize

Shivani highlights an interesting point based on his previous experiences. “Life goes by and things change, so it’s not unusual for people’s financial expectations and priorities to change over time,” she says.

But, she adds, the real problem is when couples forget to check in to make sure they’re still in sync. “It’s fine for a couple to sit down once a year, no matter where they are on the financial spectrum, and discuss what they’re working towards, whether it’s a vacation home , pay off debt or save more for retirement. Get your goals aligned.

  1. Don’t ignore the B-word

The household budget is non-negotiable, the couple say. “Budgeting may seem tedious, but having one can bring significant benefits and also be helpful in eliminating marital turmoil that occurs when one or both spouses don’t know where their money is going,” says Pawan.

The book co-written by the couple
The book co-written by the couple. (Photo: Pawan & Shivani Agarwal)
  1. Use ‘CPU’ system

Couples use and swear by the “cost per use” system.

“The technique is based on whether the amount of use of an item justifies its cost,” says Pawan. For example, he says, it would be hard to justify the CPU on a pair of Rs 10,000 shoes that will be worn five times. This would mean Rs 2,000 each time they were worn. However, a briefcase at Rs 10,000 might be easier to justify as it would be used more frequently.

“It’s not an exact science, but it allows us to create a baseline of spending that both partners follow reasonably,” he explains.

  1. Every couple should have four accounts

Two personal accounts, one for each partner, a common pool for common expenses and a balance sheet.

“Both partners need to set aside a certain amount each month here to use for investing and financial planning,” Shivani explains.

  1. Be prepared for life’s little accidents

Insurance can help prepare you mentally and financially, says Pawan.

  1. Have an emergency fund

“It should be ready, but don’t use it,” he says, adding that it should only be used in an extreme emergency. With such a fund, you feel powerful and confident in all the decisions you make.

  1. Stay out of debt

In the world of EMIs and credit cards, this could be difficult. “But follow him anyway,” Shivani said. The underlying reasoning is that you cannot borrow against the future, which is uncertain, to pay something today.

  1. Stop checking your bank balance daily

“If you have more money than expected, you will end up spending it unnecessarily. If you have less than you thought, you will have anxiety and it will break your will to face your financial reality,” says Pawan.

How Financial Planning Can Help Your Relationship Grow

The couple add that now that they have understood the intricacies of financial planning, it has helped their relationship immensely.

As for Shivani, looking at her old self, which was confused and knew nothing about managing finances, she feels a sense of pride and relief.

“I won a lot. Even though I was a big saver by nature, I realized that just saving money in the account gets you nowhere. You have to invest smartly. »

She hopes that, like her, many other women will take charge of their finances.

Edited by Divya Sethu

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