Note: I’ve made some edits to the original post to be fair to the other decision-maker in our family. Also to the definition of financial independence which I didn’t read carefully enough at first.

Last week I read this very thought-provoking post by Pepper on money, marriage and financial independence. R’s Mom also had a post in response to Pepper’s. It’s a topic I’m always interested in because it’s one of those issues I have struggled with myself.

Since I was about 11 or 12, I’ve pondered the power dynamic in a marriage and how money plays into it. Even as a child, I had this thing about financial independence. Ever since I was old enough to understand about money – and we were introduced to money early as our parents never co-opted cash gifts given to us, but let us save and spend them after discussing our purchases with them – I was never comfortable spending anyone else’s money, even my parents. I was parsimonious in my expenditure, even as my sister was gregarious.

The moment I got my first paycheck though, it was very different. I could be very generous to myself and others with my own money. I didn’t even track it that carefully. My sister was the opposite here too. This is not to say I was financially independent. I couldn’t be on the pay I was receiving. And then when I did my Master’s I was dependent on my parents for an allowance. But that was a hisab I kept in my head and now that I am in a position to pay them back, I keep trying to settle that account, though they insist that higher education was and should be their responsibility.

When I got married and moved to Hong Kong, I was dependent on V for a very short while. V left money for me every day but I felt the need to use it very sparingly. I remember very clearly buying the cheapest burger in McDonald’s. I don’t know what would have happened if I didn’t get a job – I’m pretty sure we would have figured out something that did not involve be subsisiting on cheap food – but I found a job very quickly. I maintained rigorous accounts for the first year and discovered I was well within my limit, after splitting expenses and saving a fixed amount each month.

 Now to some of the issues raised in Pepper’s post.

The infernal “so what do you do?” question: This question has begun to offend many. My brother-in-law, for example, hates it. I used to be contemptuous of it myself. But I’ll admit that I have used it in social settings, simply because I sometimes can’t think of anything else to say. I must emphasise that I am socially inept.  I don’t think this question is always posed in an aggressive or needling way; often it is a thoughtless one, tossed out automatically with the hope of providing other topics of conversation. The Mad Momma had once posted about how people often look bewildered when offered “stay-at-home mom” as an occupation. I again admitted to being one of these people, simply because I didn’t know how to take the conversation forward from there, not out of any disrespect to stay-at-home moms. Now that I am a mother, I have no such problems. I have lots to ask other parents. The Mad Momma suggested some alternative conversational props and I took her suggestions to heart.

I also think, though, that people who have made a choice must be secure in it. If you have chosen to take a break from the professional track, be proud of it and say so. It’s similar to questions that working moms face about leaving their kids – I recently got asked “oh you left them so early?” with a shocked expression, but I simply said “Yeah, I think that’s the best for me as I can’t handle being home with them 24/7 and I was fortunate enough to find really good helpers” and that was that. The interlocutor may not have been convinced but she had the grace to accept it. I would not brook rudeness though, and I would explain my choices firmly a bit and then just tell people off. I can understand how it can be annoying to be asked things in a judgmental way – like the incessant “any good news” question new couples face – but these questions are not always badly meant, so we need to examine our instinctive reactions to them. I also think that people, men and women, working outside the home has become the norm and if we want to dismantle that norm, we are going to have to work at it, and getting irritated at the ignorance people display, at least the first time they display it, might not be the best tack. Repeat offenders can be snapped at freely, I say.

Financial independence: Pepper makes a good point that married couples are rarely financially independent because even when they are earning separate incomes, their decisions are joint. This is true at the conceptual level.

But decision-making is just one aspect of dependence. The other is one’s contribution to one’s own upkeep. If you are not bringing in an income, do not have an existing income, or are not providing a service that could be quantifiable in income-terms (and I believe a lot of what a homemaker typically does can be) then one is dependent.

For me, financial independence means earning enough or having enough funds to meet one’s basic needs oneself.*

Thus, does one need to be working professionally to be financially independent? No. You could have a trust fund that covers your expenses. You could have saved enough to tide you over. You could have assets in your name designated from the income of your spouse or parent or benevolent uncle that could cover your expenses.

I remember telling my mother that I wonder about my cousin’s wives who do not work professionally because what if something happens to my cousins. My mother pointed out that they have property in their name that would keep them well provided for. Frankly, these women are probably more financially independent than me toiling away at my little job ad infinitum.

You might have quit your job but be very sure that tomorrow, if need be, you could get one and be back to earning and supporting yourself pronto. The reality is, though, as many women who take a break to care for their children fulltime when the kids are young discover, is that it is not that easy to slide back into the workforce. Nevertheless, for certain specialised jobs, it might indeed be easy to find a well-paying job. So are they financially independent or not? I’d say at the moment, no. But they are 90% sure that they could be in a jiffy and that should be good enough.

Pepper cited the example of a friend who earns a very basic salary and counts on her husband for luxuries. Is she financially independent? I would say, yes, if she can support a basic lifestyle. However, what I was earning when I started off as a journalist would not support even that. So at the time, I was not financially independent. I had a friend who was a teacher and earned a pittance. She was not financially independent either, nor did she claim to be, though she rightly took pride in her work, just as stay-at-home moms rightly take pride in theirs.

I think if you are dependent and it’s a well-reasoned dependency, then why quibble about it. My current visa status is “dependent”. I choose this because my husband’s office processes the visa very easily and it gets renewed for a longer duration that it would had I processed it myself. I know for a fact that I could get a work visa at any point should my marital status change. I choose to be “dependent” for my own convenience and I’m not ashamed to admit it. Frankly I think it’s quite ingenuous of me.

Financial independence, as per the definition above, has been touted as a mantra for women because it has been found that generally women who did not have an independent income fared worse off in a divorce or when the spouse suffered an untimely death.

It may be possible that people are very sure that they are well covered even when their income is mixed with someone else’s and it is possible that they are. However, the wisdom comes from generalities and it tells us that some amount of clarity in matters of money makes sense, especially in places (like India) where the rule of law is weak.

And herein lies the crux of my dilemma. I would like to think idealistically like those who advocate a “what’s mine is yours and vice versa” approach. But from a practical point of view, what if there is a breakdown of the marriage? When it comes to deciding on the division of money then, it is always acrimonious and I’d wager that if one member is earning and the other has not been for a long time, then the earning member is in a stronger position to claim assets and funds. It’s not like I would covet the lion’s share of our joint income were V and I to divorce. I would just want to be very clear that I am left fair and square with what I am due, which according to me is what I earned and extra services I provided to the marriage that facilitated V to keep earning (like giving birth to my children). Which is why I feel it’s important for non-earning partners in a marriage to secure an income for themselves for services rendered within the marriage.

The fact is that V and I are very similar people. We view things very practically. Maybe we are not generous enough to give each other blank cheques. We also have different priorities and spending styles, which means that there is a certain amount of push and pull over what we spend on and how we spend.

So how do we manage our finances in our marriage?

This is something that I only just achieved equilibrium on. We have a joint account in Hong Kong, into which both our salaries go, which I was always iffy about because I had no clarity on where my savings ended and his started.   This I felt the need to know about due to the reasons mentioned in the preceding subsection, and also some below. I also felt that if I had a separate account, I would pay more attention. V pointed out that this wasn’t true (and he’s right). I basically don’t have a separate account because I cannot be bothered to pay much attention and someone does need to pay attention. But my lack of attention would scare me sometimes and then I’d grumble to him (instead of paying attention).

We do all our household expenses from this account. We used to update each other on every little luxury expenditure, but now we don’t. But we do consult each other on the big expenditures.

Sounds good right? But there’s a but coming

This works when the couple’s spending style and priorities are more or less aligned. Many couples cite that they resolve differences by “having a discussion”. But what if you cannot resolve things with discussion?

On certain occasions, V has made major investments without me agreeing to them. To say that I was pissed would be putting it mildly. My instinct says that major decisions, like buying property for example, should be taken jointly and those assets be held jointly. But my sense of fairness questions this.

More to the point, what if partners cannot agree on what to do with their money? Or one is passionate about an investment that the other doesn’t buy into? What if one is so passionate that it’s a lifelong dream? Ideally, the couple should come to an agreement. But if they can’t, would it be easier for them to separate finances in such a way that there is his, hers and our money, whereby each individual partner can follow their own discretion even on some biggish things.

The more I think about it, the more I find that the coming to agreement on finances works smoothly when serendipity strikes and people were somehow able to achieve that balance, or when one partner is more laidback about the financial decision-making. When both have very strong views about what they want to do with the money and these views tend to diverge, divide and rule might be the way to go.

For example, I foresee that I might want to support my parents financially in the future. It is completely unlikely that V would ever need to do this for his parents. I would want to be as generous as I like. But I know that V and I might have different ideas on what is appropriate. But know I would not really want to have a discussion on this. That’s why I would like to know what’s mine to play with.

V very shortly wants to quit corporate work and pursue his own interests. Maybe I should be bankrolling him. Unfortunately, I have neither the earning capacity nor the generosity of spirit (maybe I would have the generosity of spirit if I had the earning capacity). V argues that he will not be living off me, but his savings. This is strictly true. The fact is that V has pushed himself harder careerwise all his life and spent less than I ever have to reach this point. But to quantify his savings, so that he can dabble into them in peace, we have to separate them from mine.

Hence, right now, we have one joint account which might be something like the current account in a business, which operate for regular expenses with relative smoothness and a certain amount of grumbling. And we have separate accounts in India with savings in each of our names, to some extent proportionate to our contributions. I believe this is fair. It works for us.

I still believe that couples should keep each other informed and take the views of their partners into account on major financial decisions even with their “own” money. I cannot logically justify why I feel this way – I do not subscribe to sentimental notions of oneness –  except to say that in a marriage the other person is your back-up/security, even if he/she is not your immediate provider. Individuals need to have a realistic picture of the financial status of that back-up. They also need to be comfortable that a financial decision taken with their partner’s “own” money doesn’t end up compromising their and/or their children’s agreed upon lifestyle.  I also think that it’s important for partners to agree upon a base lifestyle that each of them will contribute to maintaining (and traditionally non-paid for services like caring for children, looking after the home, cooking, count as maintaining said lifestyle and should be quantified and accounted for).

When I asked around, I found that couples have a range of styles in financial management. I know one couple that started out with a joint account but found themselves squabbling over minor expenditures and luxuries so much that they separated the accounts and have a joint one into which they transfer household expenses.

I know that in Hong Kong divided finances are so common that in extreme cases some couples even settle accounts with each other for dinners out. While this seems too much for me, it gives me comfort that I am not way off. Hong Kong has a higher divorce rate than India but there are still many many marriages that last extremely long and remain very romantic till the end. The number of old Hong Kong couples I see on the streets holding hands and being generally solicitous to each other warms the cockles of my hearts. But they are an extremely practical society when it comes to money matters.

Just as those who are tagged as “dependent” feel judged, I sense a counter-judgement coming from their direction about couples that choose not to completely mesh their finances. I think the dominant directive will and should continue to be in the direction of individuals securing an income for themselves in their own names as well as, if needed, the income they have with their partners. But I also feel like there might be a range of practices in between and that to judge, the details are really important and there might not be a one-size-fits-all answer.

 

*Initially I had posted this this definition of financial independence, posted by Pepper’s first commenter: “Financial Independence is a term generally used to describe the state of having sufficient personal wealth to live indefinitely without having to work actively for basic necessities.[1] In the case of many individuals whose financial circumstances fit this description, their assets generate income that is greater than their expenses.”

This is a very ambitious definition which I don’t quite agree for a number of reasons.

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