Financial Security Is Paramount

By Lisa Pallavi Barbora
Mint, New Delhi.

Financial security, independence, freedom from monetary obligation and, simply, confidence to manage your own money, often take a backseat when it comes to deeply emotional ties awakened by marriage. Marriage is a means, which becomes an end in itself. The desire to care and be cared for, to belong and to be loved, precedes everything else. Thus, in happy times, rational thought or conversations about money matters seem unnecessary.

Even though they say marriages are made in heaven, you can’t rule out storm clouds. When things don’t go as planned, communication becomes difficult–love seems distant, and financial matters take the forefront.

Why money matters?
Zenobia Tamboli learned about the need for financial freedom the hard way. She was barely 20, and married to a man several years her senior. She remembers being naive while he was the supposedly mature person in control of their finances. Although she was earning, she hardly ever saw the salary check, which went straight into their joint account. The marriage eventually ended in six years, but instead of losing hope, she chose to turn her life around on her own terms.

Initially, Zenobia had to let go of her only child’s custody, but within a few years, her daughter voluntarily chose to move back and Zenobia regained custody. She says this is the best thing that ever happened for her daughter and herself.

Zenobia remarried soon, but it fell apart after almost nine years. But by now, she had learnt well enough the need to be financially independent. The end of her second marriage did not affect her financial position in the least. Incidentally, Zenobia decided to not claim alimony or child support from her ex-husbands.

In 2008, she fulfilled her daughter Dinaz’s dream by sending her to study Mechanical and Aerospace Engineering in Australia. She used a mix of her earnings, Public Provident Fund (PPF) savings and some financial help from her father and two other entities to manage the expenses. But this was nearly seven years ago. Today, 47-year-old Zenobia has repaid all her loans (even repaying her father), and has savings spread across mutual funds and recurring deposits. Dinaz will soon complete her PhD in Aerospace Engineering.

Along with a realization of financial independence, Zenobia attributes her success to strong parental support, and her boss and mentor, Ronnie Screwvala. Screwvala, is a media entrepreneur turned investor

While Zenobia was strong and worked hard to turn her life around, it would have helped her immensely had she been more aware and prepared financially when her first marriage didn’t work out.

However, this is easier said than done. Dr Rajendra Barve, former president of Bombay Psychiatric Society, said, “The need to depend on someone and be cared for is greater in women than in men, thus, with marriage, they feel emotionally complete. Financial matters, which require a more analytical linear thinking, are left to the husband and often to in-laws as well.”

Many women do just that. And if not that, then often, daily household expenses are managed through her salary rather than jointly with the spouse. “It’s common to find the wife’s salary going into a joint account, which takes care of daily expenses,” said Barve.

Many women, in fact, aren’t aware of how much their spouse earns and what happens to that money. Women trust easily and hence, don’t expect the worse. More often than not the worst doesn’t play out, and marriages continue with the wife being unaware of her spouse’s financial position.

It’s only when things go sour that you realize that perhaps you handed over too much too soon. Separation means you have to think about providing for yourself, and the children, and maintaining a lifestyle that the family is used to on a fixed alimony. And, of course, if it’s a difficult divorce, the legal fees will weigh on you.

According to lawyer, Payal Chawla, Founder of JusContractus, “Whether or not the father has custody, he has to pay maintenance for the children. The only question is how much? Filing a divorce case is only the first step; then there is a process to declare both the husband’s and the wife’s incomes and assets to determine how things get divided.”

Matters can get tricky; the income declared by the husband may not be accurate and if assets aren’t held jointly, staking your claim to those that were accumulated as a family, may take some time.

The court of law shows fairness in matters of divorce; nevertheless, it takes time to settle and in the interim, you have to fend for yourself. Even if the court has ordered maintenance, many a times, getting the payout on a regular basis can take months.

It’s not just when you are divorced. “Many married women, may seem happily settled, but, in fact, don’t have any financial freedom. This happens because they have trusted their husbands and to a large extent only focused on playing the role of a caregiver. They haven’t built a savings basket to cater to their own needs. So, if they are unhappy in their married lives, nothing much can be done as they have nowhere to go with the children and have no means to support a separate life” said Barve.

One may be happily married, but may have to deal with a spouse’s untimely death. If you aren’t already in the know of the family’s financial situation, you will have to suddenly take over the reins. You may or may not be able to steer yourself to a place of financial safety, especially with children. A worse situation would be to realize that the savings are not much.

Lastly, there is the unpleasant and hushed issue of domestic violence–both physical and mental–that many women go through in a troubled marriage. If one is stuck in such a situation, breaking free may require support of parents and/or financial stability. The former isn’t always in your control, but the latter can be.

While it’s not pleasant to talk about such matters with your spouse or even persist too much about the financial matters which you aren’t in the know of, some awareness of the household’s financial situation is necessary as it has a direct impact on your life, and more importantly, your children’s lives.

How to be prepared?
There isn’t one way or even a standard process you can follow. However, there are some hygiene factors that you can put in place.
The foremost is communication; talk to your spouse about financial matters, the family’s monthly income, where does the unspent money or savings go, and how well is the family insured. These are the basics that you need to know. The rule applies even to working women.
According to Alpa Shah, director, Next Level Education Pvt. Ltd, and founder, Freedom Foundation, “Women are already empowered but it’s more about educating and motivating. It’s important for women to learn how to read the fine print of complicated products, know the value of investments, including jewellery, prepare a list of assets and discuss the making of a Will and clear title to assets.”

If you are earning, then try to save and invest some of that money either in your name or jointly with your spouse. Nominate your children as the beneficiaries after you and your spouse. This is crucial to secure your and your family’s financial future.
Referring to difficult divorce settlements, Chawla said, “Every issue in a marriage cannot be settled in court. Once a couple decides to go to court, the relationship becomes unworkable. Given the income disparity, often, the woman has to compromise at a lower financial settlement, which is to the detriment of the entire family. It’s best to know your rights beforehand.”

Have joint control in managing both income and expenses. Shah said “It’s most important for women to encourage their husbands to have term life insurance policies with them as a nominee. Any liabilities should also be covered through term policies so that if something should happen to him, at least the family is debt free. Another important aspect is getting a critical illness policy in place.”
Lastly, start thinking about inheritance and Wills. India’s social system is by and large skewed against the girl child.

So, while you might move back to your parents’ house, you may still have to plan on building assets for your retirement, which are independent of their assets (usually bequeathed to the son).

Mint Money take
Nobody gets married with the assumption that one day, love won’t be enough and that the marriage won’t work out. The whole idea is to build a family that will get through the good and the bad times together. But marriages do breakdown and families do end up without their primary provider. And that’s when the importance of understanding finances dawns.

“Financial independence can make you feel more secure and confident. You aren’t compelled to take the harsh decision to separate and, overall, are in a position to make a more mature choice,” said Barve.

Financial independence is not just about having funds in you individual and joint accounts and investments; it’s also about the ability to buy a lipstick or a dress without having to inform your spouse. The choice to spend on the more expensive toy for your daughter can be solely your decision if you jointly manage your finances.

It’s a big step and requires a shift in your attitude and lifelong beliefs; but taking it will ensure a comfortable and meaningful life for you and your family.

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