Meet Choo, a personal finance and investment student. As an individual, he has performed numerous financial achievements, such as saving money, purchasing property, and building a dividend portfolio.
Now he is thinking about getting married and realizing how different money management can be on a pair level vs an individual level. It is no longer a lone proprietorship, but rather a partnership.
As Choo contemplates this new chapter in his life, he's beginning to understand the complexities of merging finances with a partner. The transition from managing personal finances to joint financial planning can be both exciting and challenging. It requires open communication, mutual trust, and a willingness to compromise. Choo realizes that financial compatibility is just as important as emotional compatibility in a marriage, and he's determined to navigate this new terrain with care and consideration.
There is a shift in attitude from my and your wants to our shared ambitions, which entails more give and take, sacrifices, and joint investment decisions. All of this is easier said than done.
So, how will Choo and his significant other handle this harmoniously? One option is to hire a professional financial planner who can advise and assist clients in optimizing their money and lifting their wealth to the next level.
Before making the decision to hire a financial planner, Choo and his partner decide to have a series of honest conversations about their financial goals, spending habits, and long-term aspirations. They create a shared spreadsheet to track their individual and joint expenses, helping them gain a clearer picture of their combined financial situation. This exercise proves to be eye-opening, revealing areas where they align and where they differ in their financial approaches.
Here are four reasons why having a financial planner might be beneficial.
The 50-50 divide does not always work.
Choo's and his partner's familial backgrounds and financial situations differ. Perhaps her income is more fixed, whereas his is variable. He may be more frugal, but she may prefer to splurge.
Choo's investment strategy may be more intentional and planned, resulting in a better balanced asset allocation between equities and real estate. His partner may rely more on her EPF and fixed deposits.
Choo's liabilities may be bigger, whereas his spouse may have an outstanding mortgage balance.
With such financial circumstances, it is impracticable to distribute their assets 50/50. A financial planner can assist them in reviewing their circumstances, assessing strengths and weaknesses, and sharing opportunities and responsibilities to maximize wealth, both individually and as a group.
Inadequate visibility
If Choo and his spouse can earn and save money on their own, is a financial planner really necessary? The answer would still be yes, because financial knowledge entails five practices: earning, keeping, investing, protecting, and giving.
Choo and the future. Mrs Choo may excel in one, two, or even three areas but struggle in others, making them less financially stable.
As a result, a professional could thoroughly examine their accounts, discover financial gaps, and make recommendations on how to address them.
A complete evaluation would include aspects such as cash flow, net worth, debt obligations, investments, taxation, family planning, estate planning, and retirement.
As Choo and his partner delve deeper into their financial planning, they realize the importance of considering their future family plans. They begin to discuss the potential costs associated with starting a family, including childcare expenses, education savings, and the possibility of one partner taking time off work. This new perspective adds another layer of complexity to their financial planning, reinforcing the potential value of professional guidance.
Facilitate discussions on crucial decisions.
Marriage, home ownership, insurance, and estate preparation are all common topics for certain people. However, for many couples, these are difficult topics because they may have a substantial impact on their financial lives.
Typically, such discussions would deteriorate into arguments or be avoided entirely. Should the person with the most money or influence make such decisions? In an ideal case, both partners would be equal, with their stakes and values heard and valued by the other.
An competent financial planner would be able to enable such discussions since he or she is a third party who is less biased and emotionally invested in both persons. He or she may intervene with cooperative solutions and realistic consequences.
SC-licensed
Financial planners must hold a Securities Commission (SC) license and have their advice operations approved by Bank Negara. It may not be in one's best interests to seek advise from non-experts such as friends, family members, colleagues, social media users, or other financial sales persons who are not intimately knowledgeable with one's financial situation.
It would be especially advantageous if your financial planner is married and has children, since they may be able to better understand your current and future issues.
After careful consideration and research, Choo and his partner decide to schedule consultations with several SC-licensed financial planners. They prepare a list of questions and concerns to discuss during these meetings, hoping to find a professional who not only has the necessary qualifications but also understands their unique situation and goals. As they embark on this journey together, they feel a sense of excitement and optimism about their financial future as a couple.
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