Planning Finances Post Marriage

One of the most precious moments in one's life is exchanging wedding vows. A time of joy, hope and excitement for the husband and wife to spend their lifetime with one another. After all the excitement and celebration comes the time to get serious about your financial planning. Most of the problems in today's life stem from the financial decisions a husband and wife make. Life after marriage changes completely and expenses increase manifold. We will analyse some of the financial planning basics, immediately after marriage, which you must undertake to secure your future financially.

Goal Setting & Starting Early

Goals are the tangible results that you seek. For example buying a diamond solitaire for your wife could be one of the goals. Experts advise making a written list of the financial goals. After identifying goals the first thing is to start saving towards that goal. You must write down the goals and the amount of money required to achieve each goal and then plan a road map of how to make right mix of investments to achieve all goals. Long term financial goals could be buying a house, planning for your kid's education and retirement planning etc. Short term goals could be buying a car, foreign vacation, etc.

Emphasizing on the need to plan Financial Expert, Sandeep Shanbaug says, "After marriage, once what were individual financial goals become mutual. Husband and wife share a life together and consequently education of children, vacations, medical expenses, marriage and eventual retirement are common goals which have to be planned for, together in advance. As the saying goes, failing to plan is planning to fail."

Creating A Budget

Don't think that budgeting means cutting down on the fun in your life or restricting yourself from doing what you want to do. It does not matter whether you live salary to salary or earn lakhs per month. A written budget would help you track your income and expenses. It will help you assess what is the monthly inflow and outflow and help you cut down on the unnecessary expenses. Budgeting would also help in reaching your financial goals in time. Experts advise to write down the expenses on the daily basis to make the estimate accurate.

It will help you figure out where you can cut down on the expenses and increase savings. Remember that this time is the accumulation phase for you when you should save as much as possible as it will help you in emergencies and also help in retirement planning.

Gaurav Mashruwala, CEO, ACE, a Mumbai based Wealth Advisory firm, cautions newly weds against not having a written budget saying that "deciding and writing down how much you spend and save would help avoid fights between the couple. Without a budget the couple would lead their financial lives as wanderers. The strategy is to stick to the budget and modify only if it is unavoidable."

Insurance

Remember that Life Insurance is not a tax saving or investment tool. It is meant to provide enough liquidity to your family in case of your unfortunate death. Mayank Bathwal, Chief Financial Officer of Birla Sun Life Insurance emphasizes on the importance of Life Insurance after getting married saying that "In an increasingly uncertain world, one needs to ensure that their family is free from any financial burden in case of any unfortunate event. Insurance would help in meeting various life cycle needs like life protection, health insurance, children's solutions - towards child education, marriage and effective retirement and wealth planning"

The earlier you buy a life insurance policy cheaper would it be. If you are one of those net savvy people, you can buy a Term Insurance policy online. For example, for a 30 year old, a Rs 50 lakh term insurance policy would cost an annual premium of only Rs 7200 including taxes. As far as Health Insurance is concerned at least Rs 4 lakh family health insurance plan is a must for a couple.

Joint Finances

In case both of you are working then you need to take a decision on how do you plan to manage the finances. Opening a joint account and managing common expenses from that would be prudent. You must assign responsibilities like who would take care of the bills, who would pay the rent, EMIs etc.

Mumbai based Certified Financial Planner, Kiran Telang says, "In case both partners are working it is best to keep income accounts separate. Expenses can be managed from a joint account which receives funds from the individual income (salary/business) accounts. Joint finances work well in cases like buying of property where combined income can result in higher loan eligibility while at the same time giving tax benefit to both the partners."

Changing Name & Nomination

Have you ever asked this question to yourself 'what will happen if I die today, does my wife knows everything about my finances?' It would make sense for the couple to sit and discuss the finances together and keep a copy of all financial documents. The wife needs to decide what name she would carry after marriage and accordingly modify her documents. Taking a marriage certificate and opening a joint account may be the first step. Husband needs to take out all documents and add/change the nominee name. The couple need to re-do or re-create the various identity and address proofs, specially the wife as she is the one who would relocate to her husband's house.

Kartik Jhaveri, Director, Transcend, a Mumbai based Wealth Advisory firm, has a valuable piece of advice for the newly weds "Wife should apply for a new PAN card if she changes her surname, the passport must be updated with new name and address, create a new bank account, depending upon the need, with the spouse as the second or joint holder, in the investments such as mutual funds add your spouse as the nominee."

The above drill howsoever tedious must be undertaken soon after marriage so as to avoid any future inconvenience.

Review Your Financial Goals

Reviewing the financial plan is as important as creating one. A hard look at your budget and your investments would help you understand if you need to make some changes in the way you save, spend or invest. The life immediately after marriage is full of uncertainties and it is only after spending few years that couple understand the importance of smart saving and diversifying their investments. Since it is a start of a new phase the excitement is high and propensity to save and reviewing the plan is less.

Founder of Dreamz Infinite Financial Planners Arvind Rao has a piece of advice for the newly wed, "The wish-list of newly weds comprises more of short-term goals than medium or long term. Buying a car, house, electronic gadgets, international / domestic holidays figure on top of their list. In view of the same, its very crucial to review their plans very closely - plan needs to be reviewed at least once in 4-5 months depending on the number of short-term goals."

It is a time for enjoyment, dreams and looking forward to a long and prosperous life. Most of the friction and tension among the young couples, in the modern times happen due to bad management of financial lives. A little effort towards setting your financial basics right would help you live a happier married life.