Changes in Relationship Status and Its Impact on

[Women and Financial Planning Series]

Session 2: Changes In Relationship Status & Its Impact On Finances

We are glad to have you with us for our 2nd Session on Women & Financial Planning series

Changes In Relationship Status & Its Impact On Finances

In modern India, parents have overcome orthodox traditions of marrying their children within one's own community, to giving them the liberty to choose their life partners. While they may choose their life partners and enjoy the best of relationships, a key discussion often neglected by many is a discussion about "family finances".

It is important that when you are partners for life, an important aspect like savings and investments are discussed. There needs to be a give and take of information as it is a question of meeting important life goals like buying a house, financing a long vacation, taking care of your child's education, or even long term goals like your retirement. Besides, transparency about finances and investments among spouses helps while dealing with family exigencies if the need arises.

This session provides some insights on how a woman needs to approach personal finances with change in relationship status such as marriage, divorce, re-marriage, living as a single parent, etc. …and how prudent outlook towards money and efficient investing can result in financial freedom.

Let's begin with various scenarios...

Tying the Knot

i.e. getting married

Here are simple actionable points to discuss about money matters…

  • Understand your life partner's outlook towards money: It is essential to understand how he deals with and approaches money…

    • What motivates him?

    • What is his attitude towards saving and investing?

    • Is financial security on the top of his agenda?

    • How does he invest?
    • His investment philosophy
    • His investment objectives & investment instruments he prefers
    • … So on and so forth…

    This will provide you with a perspective and make a prudent intervention to chart a corrective course.

  • Recognise financial goals: Financial goals reflect aspirations like buying a dream home, a car, electronic gadgets, travelling abroad, children's future needs, retirement needs and a host of other goals. It's vital that the outlook towards money and investments are aligned suitably so that these aspirations come true for both partners. Also, it is necessary for goals to be well-defined and written, to create a roadmap to achieve them.

  • Make a clear distinction between what is owned and owed. You see, debt is a major cause for many relationships turning sour. Avoid jumping to conclusions. Instead, make an effort to recognise the reason and circumstances behind the debt – which could be a housing loan, personal loan, credit card dues, etc. – to get a larger and a better picture.

  • Plan to share expenses: Open a joint account, wherein both credit proportionately (on a rational basis) a part of their earnings to meet daily expenses.

  • Invest jointly: Investing in an individual capacity post-marriage can create problems on demise or physical incapacity of the spouse. Thus one should invest jointly, and also add a nominee.

  • Review jointly: Once you have invested for your financial goals, you must also review your financial plan and see if your investments are progressing towards your goals, and make changes if necessary.

Parting ways is never easy. It has a bearing on life (due to the stress involved) and career. But there could be circumstances that compel you to move on in life.


While divorces are challenging, here are facets to consider from a personal finance point of view in the interest of your long-term financial wellbeing / security.
  • Take into account the legal expenses involved

  • Consider Divorce by mutual consent - split amicably. This is a better approach both, financially and even emotionally.

  • Gather all your documents – set all emotions aside while doing the paperwork. Gather important documents such as identification proofs, investment papers, insurance policies, loan documents, credit cards, deeds of real estate agreements, and so on.

  • Ascertain your savings & investments and transfer money from joint accounts to individual accounts. Likewise split the other assets.

  • Take count of the debt i.e. how much you owe. There could be a case where joint loans were taken and there's an outstanding amount. Settle the debt as far as possible.

  • Assess the cost of living alone, because a divorce can be economically difficult.

  • Avoid any major purchases till you settle down

  • Re-evaluate your financial goals and restructure your financial plan

  • Besides a lawyer, also visit a professional financial advisor and check if your investment documents are in order and suit your new status

Single Parent
If you're a single parent owing to a divorce and/or demise of your life partner, here are some personal finance tips…
  • Ensure that you diligently create and follow a household budget. Live within your means, plus save and invest efficiently so that long-term financial goals such as children's education, their marriage, etc. can be achieved.

  • Have a positive cash flow. Think of taking up a job if you haven't been working or being an entrepreneur with the skillset you possess. In case you're divorced and receiving alimony, deploy it to productive use.

  • Consider starting SIPs in mutual funds especially equity funds for long term goals. They are a good way to create wealth over the long-term and achieve financial goals. If you're planning for your children's future needs like education don't forget to factor in inflation as it has the power to erode the purchasing power of money

  • Make sure you're optimally insured for life and health, to protect the financial interest of those dependent on you – be it children, parents and/or in-laws.

  • Have a contingency fund in place – which takes care of at least 6 to 12 months of your regular expenses. This will be like an emergency fund; or savings for a rainy day.

  • Keep a regular check of your financial health and take corrective measures if need be. Use the services of a professional financial advisor for expert guidance.

  • Teach your children the value of money. Inculcate in them the habit of saving and instil financial discipline. It will help them manage their finances better as they grow up.

  • Don't forget to plan for your retirement in your desire to meet other goals.

  • To pass assets to your children, don't forget to have a proper succession plan with a 'Will' in place.

    Losing a life partner is of course extremely heart-breaking. Indeed it is not an easy journey, but you need to be strong and in control, both emotionally and financially. Here's what you should do take control of finances.
  • Once you've settled down and come to terms with the inevitable; gather all important documents – insurance policies, investment papers, loan documents, credit card statements, deeds of real estate agreements, details of bank accounts, lockers, provident fund, if any, etc.

  • Reach out to your insurance company with a claim form. The insurance proceeds can be a good source of financial security or even to finance your children's education

  • If your spouse has left behind a Will, ensure that it's prudently executed

  • Intimate banks, provident fund office and investment companies, including mutual funds and follow the necessary formalities for effective transmission.

  • Take control of your finances and watch out for elements that could misguide you. Talk to a good lawyer and a professional financial advisor for assistance.

  • Take count of the debt and repay it

  • Evaluate household expenses and streamline wherever possible

  • Have a relook at your investments for important goals and if need be, seek the services of a financial advisor for review.

  • Continue key investments to meet your retirement needs. Consider retirement oriented mutual funds schemes as they have the potential to provide higher inflation-adjusted returns over the long run.

  • Comprehensively review your finances at regular intervals

    It is important for all women - married, single, divorced, and widowed – to be financially independent. It gives the needed peace of mind for a robust financial future. However, remember that financial independence cannot be regarded as the same as financial security. A monthly pay cheque in your bank account alone cannot render you capable of meeting all your financial goals. You ought to invest in wealth creating investment avenues such as mutual funds to meet all your life goals. If you lack the acumen to execute the financial plan, please consult a professional financial advisor.

Before we end our today's learning session, here are a few…

Points to Remember…
  • Both life partners, need to be transparent about their finances and discuss the same more frequently

  • Have a prudent outlook towards money, and manage it efficiently

  • Recognise the investment philosophy, investment objectives, financial goals before you invest

  • Invest in mutual fund schemes for long-term wealth creation

  • Make a clear distinction between what is owned and owed. Avoid getting into a debt-trap. Live within means.

  • Maintain a household budget and strictly follow it. Plan to jointly manage expenses with your spouse

  • Married couples should invest jointly (as "either or survivor") and propose their child as nominee

  • Before you think of a divorce, weigh the pros and cons. Take into account legal expenses, ascertain your savings and investments, the cost of running the house alone, take a count of your debt, gather all your important documents, revaluate your financial goals and restructure your financial plan, amongst a host of other facets

  • Single parents should consider starting a SIP in mutual funds to plan for their children's future education needs

  • Teach children the value of money and inculcate the habit of saving

  • Optimal insurance coverage, for both health and life is a must

  • Have a contingency fund in place to match about 6-12 months of regular expenses.

  • Engage in retirement planning and write a 'Will'

  • Keep a regular check on your financial health and take corrective measures if need be

So to end our learning exercise today, we now invite you to test your learning by taking up this simple quiz (and win exciting prizes!)

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