The unbearable weight of financial negotiations
I have answered reader, viewer and listener questions for a long time. I have seen them change over time. There were entry level questions about what to do ₹50,000 in the bank, which stocks and funds to buy, portfolio questions about asset allocation, strategy questions – lots of money management questions. But as I complete a year of my audio-only podcast, some serious questions are starting to come – tentatively, and mostly anonymously, but slowly. These revolve around family and finances, inheritance and the problem of money negotiations between spouses, and the whole myth of the big happy Indian family. We can celebrate together during the festivities, but we will also see each other in court the next day above the flat in Lajpat Nagar that papa.ji give away brother and not me”.
Financial stress in families begins to appear at different stages of life. It can begin after marriage when different value systems, spending patterns and lifestyle needs begin to emerge as the couple moves from the beginning to fix the leaky tide. I received a question from a listener who was unable to take care of his wife’s health related needs. Apparently, he wanted a life he couldn’t afford and wasn’t willing to cut his expenses to stay in a single person’s house. This was a train headed for disaster that would end in debt or divorce, maybe both.
Although data is not available for middle-class India and its reasons for marital discord, data from the United States (US) shows that money is one of the main causes of divorce. A study by the Center for Divorce Financial Analysis (tinyurl.com/5h2eejaz) put money issues as the third biggest reason at 22% of why a marriage fails, coming after basic disagreements at 43% and infidelity at 28%. It also says that fundamental disagreements also lead to tensions in attitudes and values about money. Such stories can work in two ways. I personally know of couples where the wife works and the husband’s life needs keep him yoked.
The next step is when older children choose to stay at home with their parents. Although large extended families living together are common in India, the new urban reality is often nuclear. But even in big cities, the option of living together is always there, especially since the creation of a new property for a new family is very difficult. Financial stress arises in relation to joint expenses and the costs of separating the whole family. The cleaners scoff at any attempt to discuss these issues, but under the carpets in many of the three-seater rooms, are stories of repressed anger as one part of the family pulls hard. But when I think about the increasing number of questions surrounding this area for me, it starts to change. A good way to be fair, since young people’s earnings are much smaller than at the peak of their careers, is to divide the joint income on a pro-rata basis. Everyone spends according to what they have instead of spending an equal share of the cost. At some point, this equation will drop the post-retirement age group – so an annual update is needed to change the distributions.
Perhaps the most controversial stage is when it comes to inheritance. And legacy, property remains the biggest point of contention. Financial assets are very easy to bequeath and often require a choice backed by a will and death to transfer the money, but it is real estate that often ends up in court. Report of the Center for Policy Research (tinyurl.com/37jyfvr9) estimates that about a quarter of all cases decided by the Supreme Court involve land disputes and three-fifths of all civil cases in India involve property disputes. It is true that not everyone is linked to the inheritance, but these would make a big part.
However, a parent’s financial problems may not be as simple as who gets what, but they can have many dimensions. One listener got a home loan that her mother, a school teacher, took out a year before she retired. He expected that he will take the loan, which destroys his financial stability completely. Another wanted to get the money to pay his sisters for the family home he inherited.
Most disagreements can be avoided if we are clear about what we want to do with our possessions after we leave. But even the subject of death becomes an emotional bomb in many homes. If the conversation is started by a son or daughter, there are two answers – are you greedy for your share or do you want me to die? Mostly it’s not like that, but it’s just a desire not to have big issues between siblings after death. Choices and wills are the decisions of the second stage, the first is for us to choose what we get when we are gone.
As I answer many questions about these money and relationship issues, I find that a non-emotional, no-nonsense approach works best. If we can break the iron chains of past events that inform our thinking today and make decisions about money to keep justice, common sense and responsibility in mind, our lives will be easier. It will be the same in Indian courts.
Disclaimer: I only answer strategic questions on the podcast, I do not practice business and I do not recommend any particular product.
Monika Halan is the best-selling author of the Let’s Talk series of books about money. Opinions expressed are personal.
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