The ringing of the wedding bells is a time of great celebration and cheer! Having said that, marriage also represents a pivotal moment in your life - you are now responsible for the life and wellbeing of another individual, and that surely isn't a thing to be taken lightly.
It goes without saying that as a married couple, money will play a key role when it comes to ensuring that your joint life continues to function like a well-oiled machine. The initial financial decisions you take as a married couple will have a far reaching impact on your combined future, so pay close attention to the pointers given below.
First things first - make sure you don't sweep money issues under the carpet. It's vital that you sit down with your partner and discuss money - be transparent not just about the present state of your finances, but about your money values as well. Try and find middle ground.
Coincidentally, I was part of a week long, hosted
radio show on 94.3 FM just last year (as part of an investor awareness initiative by UTI Mutual Fund), during which this subject was discussed in fair detail.
In my opinion, the most important first step a married couple needs to take is to have a financial plan prepared - even if it's a very basic, unembellished, goal based plan. In doing so, you'll undoubtedly uncover many issues related to your individual aspirations about the future. Your opinions on some of these may differ - that's wonderful. You could agree to disagree for now, or try to find common ground. Either way, it's bound to prove a cathartic exercise.
Going by statistics alone, you'll likely be somewhere in the age bracket of 26-30 when you tie the knot. Remember, this is the best time to start saving for your long term goals in aggressive asset classes. So the first thing you should do is open a demat account and start buying high quality, blue chip shares every month, with the intent to hold onto them for five to ten years. You don't need to be a rocket scientist or an expert analyst to do this successfully, and you certainly don't need to trade actively in shares; you could even choose ten random stocks from the NIFTY index and you'll probably be well placed in five to ten years in terms of capital growth.
Second, start a long term Mutual Fund SIP towards your retirement. Agreed, your retirement is probably over thirty years away at this point, but starting off early will give you a head start like you wouldn't believe. There's a popular financial planning concept called 'cost of delay' which is worth knowing - in a nutshell, this concept states that the cost of delaying long term goals by seemingly small lengths of time can be monumental.
Third, you may need to re-look your life cover. Do so by way of buying simple term plans with no return of premiums at the end. Depending upon your income, your human life value will likely range from Rs. 1.5 Crores to Rs. 5 Crores. Buy enough term insurance to cover this amount, plus the value of outstanding liabilities that you may have. Do so early, and you'll need to shell out a lower premium amount. Avoid taking out ULIP's and traditional policies with low returns and taxing exit clauses.
Fourth, buy a great health insurance plan. Spend a significant amount of time researching things like pre-existing conditions, waiting periods, maternity clauses and wellness benefits, among others. My advice is to take a floater plan only if you're a young family - exclude aging parents from floater plans and take out individual health plans for them if required. Although the amount of cover required is subjective, my personal take is that Rs. 10 Lacs is a barebones prerequisite for a nuclear family consisting of a husband, wife and a child.
Fifth, start putting together an emergency fund. This money needs to be in liquid, low risk assets with minimum exit barriers (such as cash funds). 'Hide' this money from yourself or you may end up splurging it on a new car or a flat screen TV!
Sixth, think long and hard about your decision to buy real estate; don't do so in a hurry. Over the years, I've seen several clients dive into a real estate purchase with both feet - only to regret it later. Loans are an expensive and long term commitment - you'll likely end up paying around 1.35 Crores of interest on a 1 Crore real estate purchase! Be clear on why you're buying the real estate - are you going to be an end user, or are you planning to sell it in a few years? Taking out a loan to buy real estate that you're going to sell in say, five years' time, is foolhardy. Consult your financial planner on your decision to buy real estate to get a clearer perspective on it. The last thing you want is for your home loan EMI to sap your liquidity to the extent where you have no room left for anything else.
In conclusion - as a newlywed, you need to start over and take a deeper look at your combined finances. Envisage your 'perfect future' and start taking baby steps towards it. Just don't forget to safeguard yourselves against risks, as you're now responsible for two people and not one.
_20241003152432_original_image_28.webp)