Marriage is the start of a new life. Newly married couples need a solid financial base to lead a happy life. They should make a sound financial decision in order to accomplish their short and long-term financial goals.
For example, buying a brand new car may be your short-term goal or buying a dream house may be your long-term objective. For newlyweds, financial planning is the best way to make their dreams come true. Here are a few tips to be considered for financial planning.
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Have a discussion with your spouse on your current financial situation. Understand the collective and individual spending habits, the things you wish to enjoy or the things you want to buy in the near future. Spend some time to understand needs, aspirations and dreams.
Craft a budget which is a projection of your income and expenses. This will help decide how much money is required for the bills. A budget is a widely used tool to keep your spending under check. For example, if have decided to spend just Rs 5,000 on shopping this month, you must restrict your spending to this amount instead of spending on unnecessary things.
Start building an emergency fund if you do not have one already. An emergency fund is useful during emergencies, including medical emergencies. This must be a top priority as it protects your finances and safeguards your relationship. Emergency funds must be easy to access. For example, if you can maintain a separate bank account for emergency funds, it will be easier for you to access the funds. Have at least 6 months of living expenses in the emergency fund.
How much do you earn and spend as a couple? What is your bank balance? What do you own? What are your liabilities? Make sure you maintain a good bank balance and your assets do not exceed the liabilities. If you can consolidate your assets and liabilities, as a couple, you have control over your finances.
See Also: Steps in the Financial Planning Process
Insurance is for risk protection. It may be health insurance or term insurance. In today’s stressful and restless World, health issues are increasing across classes, including among youngsters. Therefore, health insurance is a must. Term insurance is a life insurance product that offers financial protection to your dependents. If the husband buys a term insurance policy for a sum assured for Rs 50 Lakh, the wife, who is the beneficial nominee, gets the sum assured (death benefit) of Rs 50 Lakh on the untimely death of her husband.
See Also: Financial Planning for Youngsters
Credit cards are buy now and pay later. Using credit cards is convenient vis-a-vis carrying cash around. You can borrow up to your credit limit. When you use credit cards responsibly, you are able to build credit score. The management of credit cards is important because when you default on your credit card bills, you have to pay late payment fees. Credit card interest is really high, in the range of 3-4% a month. Settle all credit card dues within the due date.
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