Being single or in a relationship doesn’t just change your social media status or your weekend plans; it also changes how you budget and plan.

Financial planning: When you’re single versus when you’re in a relationship

As with anything that’s important, financial planning and priorities can be very subjective. It depends on a host of things such as your age, income level, and life goals. One essential aspect that many tend to overlook is their relationship status. This is very much a key factor that should determine your financial priorities. 

Not convinced? Let’s look at the example of Miss Arora and Mrs Gupta. 

Miss Arora is a 26-year-old graphic designer living alone in Mumbai. She is single, focused on her career, and doesn’t have any intentions of getting married in the next five years. Mrs Gupta, a school teacher in Mumbai, is a 29-year-old newlywed. While the two women are in the same age bracket, have similar incomes, and live in the same city, their financial priorities (that is, the way they should go about their budgeting and financial planning) is quite different. 

Related: Does your partner spend impulsively? Here’s how to handle it

  • Buying a home

Miss Arora lives in a rented apartment and is still saving towards the down payment for a home she wishes to buy by the time she is 32. That’s six years of diligent saving in order to put up around Rs 30 lakh. 

On the other hand, Mrs Gupta, along with her husband, bought their home in their first year of marriage. This was possible because the down payment for the home was split between husband and wife. So, they could reach the milestone of owning their own home at a much earlier age than would have been possible single-handedly.

  • Expenses and budgeting

Miss Arora lives alone, and the only expenses she needs to consider are her own. This includes living expenses and debt payments, as well as discretionary expenses like shopping and travelling. She is not answerable to anyone but herself regarding what she chooses to do with her income. Hence, when she budgets, it’s a solitary activity with no external considerations. 

Mrs Gupta has to work as a team with her husband and also needs to prepare a family budget. In addition to their home EMI payment, she has to account for her husband’s car loan, health insurance premium for two sets of parents, and other recurring expenses. As for discretionary expenses, she has to understand and account for what her husband wants as well. Sometimes, a little compromise from either side would be in order.

Related: With a little planning, any single woman can live alone comfortably

  • Savings and investments

Miss Arora has not yet started a retirement fund or even realised its importance. Since she’s not accountable to anyone, there are some months when she goes overboard with shopping or plans an impromptu weekend getaway, without being able to save anything. Since she doesn’t have anyone to discuss options with, she tends to drag her feet on investment decisions. 

Mr and Mrs Gupta help each other stay on track with their savings goal – when one falters, the other reminds them of their priorities and helps to refocus. Investments are part of their weekly discussions, and they quite enjoy talking about the performance of different funds and how the market is doing. They strategically decide on their investments together. 

  • Planning for future needs

For Miss Arora, buying a home is her most important future financial goal. In addition to that, funding her one-year stay in New York City is another financial goal. The Guptas, on the other hand, are planning to have a baby soon and will have to start planning for their child’s needs – from delivery to education. 

Besides this, Mrs Gupta hopes to start her own business venture later in the year, for which she would need sufficient capital. Again, the future needs of the couple should be combined and discussed properly so there’s no scope for any ambiguity or disagreement later. 

Related: Parents to be? Tips to share the financial responsibility of raising a child

If you’re new to a relationship or don’t plan with your partner, here are some tips to get you started:

  • Have an honest conversation

The first thing to do is communicate with your partner that you want to discuss your financial status and future. They should not be caught off guard; they should be willing to engage in the conversation. Talk about how planning together financially is crucial and how you’d like to take it seriously.

  • Review where you stand

If this is the first time you and your partner have sat down together to discuss your family finances, both of you will have to review where you stand relative to each other. Be honest about your money habits, your financial commitments, and your non-negotiable expenses. Patiently listen to your partner and understand how they feel.

  • Set financial goals together

Once you both know where you are placed financially, decide where you want to go. Financial goals are always linked to life goals, so you will have to discuss your future goals and dreams. This can be marriage, starting a business, travelling the world, having children, etc. It’s important to have major goals in common, so you are both equally dedicated to saving for them. 

  • Save a percentage of your income

This step is crucial to ensure that no resentment builds up. If you and your partner earn similar salaries, contributing to monthly expenses and saving goals equally is the way to go. But if there is a significant difference in your incomes, contribute a fixed percentage of each of your salaries, say 30% for home EMI payment, 15% for living expenses, and 15% for savings. 

  • Schedule family budget meetings

It’s important to schedule periodic meetings for budgeting and to review where you are at in terms of your financial goals. This will also give you and your partner an opportunity to discuss what’s working out and what’s not, whether anyone is facing issues in contributing or saving as decided, or if any changes need to be made to future goals or plans. Consistency is key.

Last words

There are financial pros and cons to being single as against being in a relationship. But in the end, it all depends on how you use them to your advantage. There’s strength in numbers only when there’s effective communication and coordination. There may be disagreements off and on, but with patience, understanding, and consideration, you can navigate it all with an understanding partner. Take this quiz to find out if you and your partner a (financial) match made in heaven.