Newly married and lovestruck? Well, that’s great. You may have coughed up your life savings to officialise the union with a grand wedding. Even if you haven’t, you have in a way committed to ‘what’s mine is yours, and what’s yours is mine’. Sweet as it may sound, we’re pretty sure ‘debt’ isn’t something you signed up for when making that promise. So, the best way ahead is to sit with your spouse and openly talk about ways to handle finances together.
To make this conversation easier, we have compiled a list of tips. Following these tips will prevent finances from crippling your happy marriage.
Be upfront about your financial history
First things first, don’t keep your other half in the dark about your financial situation, no matter how uncomfortable it feels. From piling credit card debts to outstanding loans, be transparent about them all, as this will only help you plan your financial goals together and save accordingly. This is the first step towards understanding the investment options that can be considered and the percentage of total income that needs to be saved while cutting back on unnecessary expenses.
Go separate or don’t
Relax, we are just talking about bank accounts. You can choose to maintain a joint account or have two separate accounts or have both, a single and joint account as well.
This is ideal as it allows each spouse to take care of his/ her loan or individual expenses without infringing on the other’s earnings. It will also help avoid conflicts on spending habits as financial freedom is retained. Both, however, agree to split the monthly household expenditures and bills.
This is the most simplified way as all expenses will be made from this sole account making it easier to track and budget. At the risk of sounding too premature, this can also be like a common family account from which you can spend for your little ones in future. The only con? It may be a little tricky to plan surprise purchases for your partner!
Joint & separate accounts
This one is a cocktail of the other two options, thus maintaining a perfect balance. You can plan and work together towards retirement goals while also treating yourself or your partner to a surprise without the need to discuss it first. However, be prepared to keep a track of multiple accounts.
Set a budget
Just like you used to set a monthly budget for yourself (or we hope you did) before you tied the knot, do the same now. This involves first acknowledging and respecting each other’s financial commitments, and dreams. Once you have clarity on the wants and needs, you can break down your total income and set reasonable limits on each goal. This includes everything – from the plans you have for your parents to entertainment, dining, and clothes.
Delegate financial responsibilities
It’s easier to blame your partner for missing payments or an overdue bill. The best idea is to share responsibilities between the two. For example, one can be in charge of the monthly electricity and house maintenance bills while the other can focus on the EMIs and loans. Being accountable for specific tasks makes it easier to keep track and ensure nothing gets missed.
Park funds for your long-range goals
There are different investment options you can consider for the future. Open a SIP for your dream vacation, opt for a ULIP to get the benefits of both insurance and investment and start an NPS for your retirement goal. Few factors to be considered when zeroing in on your investment avenues include risk appetite, tenure, and liquidity, among others.