Financial blunders to avoid in a marriage

Marriage changes an individual's life in many ways, bringing a lot of joy, additional responsibilities and worries in small measures.

After marriage, either both the individuals will be working or either one. This determines the income source and as for expenses, it is largely based on the standard of living that one maintains.

There are a lot of things that a couple may want to clarify right at the onset of their marriage, such as life goals and financial aims. In fact, keeping in mind the rate of inflation, it is sensible to start planning for children's education, marriage and retirement as well right from the first day of being married.

Managing money and family planning

In India, people mostly make any serious investment like gold or property only after marriage. Money management takes serious undertones as family planning also enters the picture. Many couples make the mistake of paying greater importance to either money management or family planning, whereas both must be managed simultaneously. Expenses towards children begin right from the point of their birth, schooling to their higher studies.

There is an argument both for and against starting a family early in life. On one hand, it means that you will be through with all the big responsibilities of your life by the time you retire, while on the other, it means more financial stability before you take on the responsibility of a child.

Changing precepts of marriage and money

Contrary to the previous era when a majority of weddings went unregistered, most of the urban marriages are registered formally now. Many a time, it is carried out in the same hall where the wedding is conducted. There are numerous legal rights and obligations that come into action once a marriage has been legally formalised.

There are a few age-old financial precepts of marriage which hold true even today:

• Having at least one bank account held jointly as a couple. This is very helpful especially when you are making investments or taking a loan jointly.
• Applying for home loans jointly as far as possible. The odds in favour of a sanction rise by doing so. Also, in case both the partners are working, then both can enjoy tax concessions.
• Getting all real estate registered in both names for administrative as well as loan purposes.
• Getting the wife's name changed on all legal documents including bank accounts, PAN card, passport etc.
• Having a budget for keeping track of your monthly expenses and how to manage them.

Financial planning for the newlyweds

As in the case of all personal financial planning, it is essential to have a short-term, medium-term and long-term financial plan each. This can be used as a definite plan or as a yardstick by which you can measure your financial success and also keep tab of the roadmap you have set for achieving your joint goals. These goals may be further categorised into needs and wants to mark their importance.

Let's take a general financial goal, for example:

Time frame	Goal	Need/want	Points to note
Short term	Accumulate savings	Need	Income of 6 months is generally used as a yardstick
	Buy insurance	Need	Adequate cover as per your needs
	Purchase assets (car, house etc.)	Want	Assess cost benefits as opposed to the amount to be borrowed
	Retirement planning	Need	Disciplined long-term investment
	Incidental expenses (vacations, monthly expenses etc.)	Want	Should be made after savings and investments from the surplus to avoid over-spending or borrowing
Medium term	Children's education	Need	Stard accumulating funds from child's birth
	Realty investment	Need	Consider pre-paying the loan and investing some other property
	Streamline retirement plan	Need	Assess the accumulated retirement fund and continue investing in the surplus towards the same
	Incidental expenses	Want	Create a self-sustaining corpus to regularly fund incidental expenses such as holidays, random purchases etc.
Long term	Assess retirement corpus and liquidity	Need	Continue the assessment of retirement corpus and reconsider investment funds allocation to more stable sources for earnings guaranteed returns (e.g. less equity, more bank deposits)
	Children's higher education	Need	Must begin at an early stage and continue right up to the point when the actual expense occurs
	Children's marriage	Need	Can begin at a later phase after buying a house
	Estate planning	Need	Should be effective from the stage where you have accumulated enough assets and your family is settled
	Expenses after retirement	Want	Should begin along with investment for retirement fund

CONCLUSION

Financial planning is a dynamic process which evolves as years pass and a couple assumes new roles and responsibilities. However, it is essential to have a shared vision and attitude towards expenses as this financial stability is highly essential for a stable future.