Personal Finance

4238

Financial planning for newly weds

27 May, 2014

So you are married now and it feels as if you just got off a roller coaster ride. Preparations, invitations, logistics, shopping, honeymoon is all behind you and you have slowly started settling yourself in your marital life. This is the time to get to know each other better, understand each other’s whims and habits, likes and dislikes and perhaps prepare ground for what is going to be the longest and most eventful journey of your life. A successful marriage is built on a strong foundation and both partners have to contribute equally towards that strong foundation.

There is a long list of things one needs to work on in a marriage and monetary affairs should preferably occupy a spot in top 5. It may not be easy to talk about money but it is crucial. Being open and honest about your financial affairs helps in building trust and confidence in the relationship. To start with, here are some things you can do to break the ice and make money conversations easie.

Discuss the past and present

The relationship with money may differ from person to person. For example while one partner may be as astute saver, the other one may be a spend thrift.  Unless you share your experiences with money, it will be difficult to know whether you are alike or different in your money habits and if different, whether and how you can find a middle path. Narrate your past experiences and how you feel about spending and saving. Share the information on your assets and liabilities as well as income and expenses. Whether you choose to consolidate your finances (which is preferred) or keep it separate, both partners should know about the other’s finances.

Budget your expenses

Prior to marriage, two individuals may have their separate set of needs and wants. But post marriage, some expenses will become common whereas some expenses may remain personal. You can sit together and jot down the expenses you need to make on a monthly and annual basis - existing EMI’s, rent, household expenses, fuel, discretionary expenses such as shopping, dining out and entertainment, contribution to parents and the like. This would help in setting limits for expenditure and keep the expenses under check. 

If both husband and wife are working, they may decide to open a joint account in which a fixed amount can be contributed by both every month towards the common expenses.

Talk about your future aspirations

It is important for couples discuss the things that they would like to achieve in future. Basically, jot down their financial goals, both aspirational and critical. It could range from purchasing a property or a car to planning for a child and retirement. Certain goals can be common while certain others may be individual goals. By sharing individual goals with your partner, not only would you involve them in your dreams but also help them identify why certain things may be important for you. The flip side is that it may lead to arguments or dissents, but sharing openly will help you eventually find a middle ground.

Cover your risks

Some insurance covers may become relevant post marriage, which earlier may not have been applicable. A case in point is life insurance. If your spouse is financially dependent on you, you need to have an adequate life cover.  Hence the couple needs to ensure that they are both adequately protected for risks to life, health and property. Some of the important covers that they may need are life insurance, medical insurance, personal accident cover and home insurance.

Consolidate your financial affairs

Be it your investments or liabilities, prepare one consolidated picture as a household. It makes no sense if the husband is carrying a personal loan and the wife is investing money in fixed deposits. Consolidating your finances will give you a better perspective and help you take the right decisions with your money. Post marriage, the couple needs to function as one unit and not as two separate individuals doing their own things. At some level, their path and goals need to align and they need to jointly work towards a happy, secure and content future.

It is a fact that discussing financial affairs may be awkward if you are newly married. But it is important to get past that initial hesitation and openly discuss financial matters. This will help build trust in the relationship and pave the way for a solid and secure financial future.

Neeti Sethi, ACA, CFPCM is a Partner at Acumoney Consulting LLP and heads the Financial Planning and Investment Advisory vertical.

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