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How To Manage Money After Marriage?

Mr. C.S. Sudheer | Posted On Monday, October 17,2016, 07:20 PM

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How To Manage Money After Marriage?



“Chains do not hold a marriage together. It is threads, hundreds of tiny threads which sew people together through the years.”

                                                                                                                                                                                                              -   Simone Signoret

Financial planning for newly married couples:

Your marriage is held together by several threads. One of these threads….money. Yes managing money is very important, to have a happy married life. Marriage is all about communicating with your spouse. The first thing you need to do….start talking money with your spouse.

  • Write down your mutual financial goals.

Both you and spouse have decided to buy a car. This is a mutual financial goal. Now you both decide how to save/invest to achieve this goal.

  • Discuss bank accounts

This is a very important discussion. Should you and spouse have a joint bank account, or go separate ways. Pooling money through a joint account shows trust. However if things go sour, this is a decision, you could regret.

  • Have weekly money meetings with your spouse

Have a weekly money meeting with spouse, where you discuss….only money. This is a time to align financial goals. You want to buy gym equipment. Your spouse wants to buy some good clothes and have a grand holiday. Look for middle ground.

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Manage money on Day 1 of your marriage

Marriage changes your life in more than one way. Marriage brings happiness into your life and also additional responsibility. Marriage could mean double income….where both you and spouse work, or you are working and your spouse is a homemaker. How much you earn and what you spend on….determines your standard of living.

  • You and spouse discuss life’s goals and financial aims. Your life’s goals might be giving your children a good education, saving and investing for their marriage and keeping money aside for a happy retirement. Your financial aim….how to save and invest for your life’s goals.

How to manage money as a couple?

Managing money starts on day 1 of your married life.

  • At least one of your bank accounts, must be a joint bank account. This joint bank account is very useful while making an investment, or while availing a joint home loan with spouse.
  • If you are buying a dream home, apply for a joint home loan. The bank considers both, your + spouse income and then calculates home loan eligibility. You can get a higher amount of home loan, if you avail a joint home loan. You also get tax benefits.
  • Buying a property/house? Get it registered in both your names. This is very important if you want to avail a joint home loan.
  • Make a family budget. Write down all the income, you and spouse earn. Keep track of all expenses.

Managing money if both you and spouse are working

Both you and spouse are working. You are a double income family. Now to the big question…..How to manage money? Simple….You are the primary breadwinner and earn a higher salary, than your spouse.

  • You keep your salary, for the family expenses. Your salary is used for daily expenses, purchasing groceries, paying of utility bills such as electricity bills, water bills and mobile bills. You also buy household appliances and the furniture. You also bear children’s expenses. You keep some money at home, so that you and spouse have emergency cash.

What about your spouse’s income?

Your spouse’s income, is used for investing and also for paying the life insurance and health insurance premiums.

  • Your spouse’s income can be used for investments. If both you and spouse choose to invest in conservative financial instruments, make an investment in fixed deposits, gold, PPF and even tax saving bonds.

  • If you and spouse decide to invest aggressively, choose an investment in equity (equity mutual funds + stocks). You invest part of the money in equity and part of the money in debt (This is called asset allocation).
  • Never step out of your home, without life insurance and health insurance. Opt for a term life insurance plan. This is a pure risk protection plan, which gives your family money (death benefit), on your/policyholder’s unexpected demise. However you get nothing, if you survive the term of the plan. Opt for a family floater health insurance plan. Your entire family is covered under one single health insurance plan.

SEE ALSO: Retirement Tax Benefits - EPF, VPS, PPF, Mutual funds, SIPs and NPS

Newly married? Create an emergency fund

You and spouse must save for a rainy day. Well…rainy days are those financial emergencies, which strike without warning.If you are newly married, have at least 6 months worth of living expenses, in your emergency fund. You must be able to withdraw this money in a hurry, in case of an emergency. Invest this money in a liquid fund or a fixed deposit.

Manage money for a good retirement

You work very hard and save/invest for your children’s education and marriage. You hope your children will take carry of your financial needs, in retirement. Great….your children would definitely look after you in retirement, but why depend on them? Why not save and invest some money for retirement? When it comes to retirement….think long term.

  • You can invest money in equity, which gives returns more than inflation, over the long term. You can stay invested in equity for about 10 to 15 years and collect a huge corpus at retirement. An investment in equity, is not too risky over the long term.
  •  If you are a conservative investor, invest your money in PPF and fixed deposits, for a happy retirement.

Money is either the best or the worst area of communication in our marriages.”

Sure….bad money management might not lead to a divorce in India, but it can lead to a lot of fights. Be Wise, Get Rich.

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