Got married? Consider these financial tips:
Because you need to have a clear understanding with your partner regarding expense bill, savings, investments and other money-related matters. It may seem difficult, yet it is important.
Here we take a look at some of the important things
newly-weds need to consider while preparing a financial plan:
Expense management
Another important thing to do is to make a list of household expenses (regular as well as one-time) that you expect to incur. You are just beginning to share your life with your partner. So it is advisable to add a bit extra to the initial estimates.
Clarification of accounts:
While you should retain your individual bank accounts (this is especially necessary from the point of view of convenience in paying tax if both the partners are working), you need to open a new joint bank account with an initial deposit equivalent to the wedding receipts in it.
Risk management
There should be an adequate risk cover on the life of the earning member/members to cover for any financial distress in case of any unfortunate event.
“After marriage one needs to review one’s coverage to take adequate life cover in a bid to protect one’s spouse and family from the risk of premature death. If the spouse is working, then her income earning capacity also needs to be protected and if she is a housewife, she needs to be given adequate protection which could safely tide her over any financial crisis that might occur in the absence of the breadwinner,”
Emergency fund
It is also advisable to keep some amount in an emergency fund to support your regular expenses in case of any urgency.
“You can invest another three months’ expenses in a short-term debt mutual fund, which can be cashed at a short notice, but will earn better post-tax returns than a bank fixed deposit,”
Focus on defining short-term priorities:
Make a list of things you wish to buy. The key to effective financial control is to buy only the absolutely urgent items and postpone the purchase of the rest, even if you have cash to go for everything right away.
Stagger the target dates of the postponed items over a six-month period. If you shorten your shopping list, you will be surprised later to see how well you managed without many of the excluded items.
Set your medium and long-term dreams:
From buying your dream house to affording the best education for your children, it is imperative to describe each long-term goal in financial terms. After this the amount to be invested on a regular or lump sum basis to accumulate the desired level of capital to meet all the important milestones in your life should be determined. You may like to take the help of a professional financial planner for this exercise.
Accumulation for your future:
Implement your financial plan by identifying different investment instruments which can help you achieve your goals. Ideally systematic investment plans in equity mutual funds may be used for this purpose.
“Final selection of instruments depends upon your profile, temperament and knowledge base of investments. Needless to say that before earmarking this amount, keep in mind immediate needs as well as annual expenses such as insurance premiums which could impact your cash flow,”
It is also advisable to discuss the financial matters with your spouse so that both of you are aware about the money that is being invested. It is important for both the husband and wife to arrive at a mutually-agreeable financial plan
