Managing the finances is an inevitable part of marital life. Presented below is a financial checklist that can help newly married couple get their financial life in sync.
- Money and the attitude towards it
Each partner must ask themselves a variety of different questions to themselves and his/her partner about his her attitude to money. A few examples are:
- Do you spend all your salary, or do you save a part of the salary every month?
- Do you may purchases after planning and research, or are you habituated to impulse and/or expensive shopping sprees?
- With regards to investments, do you avoid risk and go for debt funds and fixed deposits, or do you go for equity funds, stocks, and other risky investments?
- Are you ok, or not, with burrowing or lending money to/from friends and family?
- Are you ok with using credit cards or availing personal loans and managing such debt, or do you like being debt-free?
The attitude and outlook of the partners towards money will help create the basis of a great financial relationship in marriage, just after the wedding and when the couple starts a family. If this aspect has been discussed and sorted before the marriage, then it’s awesome. Else, there is no better time to do it than now.
- Discuss Financial and Personal goals
Goals can be financial or personal and they can be for the long-term or short-term. It may include goals like higher studies, charity work, hobbies, change of job or sabbatical from work, buying a home or a car, having children, retirement planning, or annual holidays, etc. Discuss such goals and plan accordingly.
It is also vital for a couple to regularly review the goals and make changes if and when necessary. This will ensure that the two of you remain in sync with life’s goals.
- Consolidate liabilities and assets of each partner
Sit down together and make a list of your earnings, expenditures, and monthly savings. Talk about the varied investments, bank accounts, credit card debt, loans, etc., of each one. Later, discuss and plan the different areas of investment and come up with a strategy of allocating varied assets.
It would be perfect if newlyweds do not have any existing liabilities like credit card debt, personal loans, etc. If it is not so, then the couple need to come up with a plan on how and when they can get rid of each of their debts.
- Manage expenditure as a couple
The personal/individual bank accounts, cards, etc. that each couple had before marriage can be held by each after marriage as well. Additionally, it is also advisable to open up a joint account and/or get new credit cards so as to be able to manage the varied expenses more efficiently and also for better tracking of spending habits.
It is also important to discuss the percentage of earnings from each individual that will be deposited in the joint account. This issue will come up only if both the husband and wife are working. Agreeing upon a defined deposit will help prevent future hassles.
- Create a budget
It is important to create a budget for all newlyweds. This will not only help you live as per your capacity but will also help achieve financial discipline and avoid monetary problems in the future.
- Set aside money for an emergency fund
Life is fickle and couple can face a number of emergency situations such as loss of job, fire, health problem, etc. Newlyweds should be financially prepared to handle such issues.
After calculating the monthly expenses and savings, a couple needs to discuss and set aside at least 6 months to a year worth of expenses in an emergency fund. This will help tackle the difficult time.
You can keep this emergency fund as a fixed deposit, or in a savings account, or in some kind of liquid fund. A couple should discuss and choose an option that is right for them. The only thing that couples need to make sure is that the fund is liquid and easily accessible, to both wife and husband. Running around from one place to another, excess paperwork, or waiting for a few days to get the fund is the last thing that you would like to do in an emergency situation.
- Manage important documents
Women who change their surname/last-name after marriage need to update all their documents and inform about the change, wherever required, such as work. Also, couples need to change the emergency contact person to his/her spouse.
Depending on who moves to the new place and whether the new house is an owned or rented property, the partner will also need to update the address on his/her documents such as credit card, bank, passport, etc. The same also need to be updated with your employer, broker, etc. Newlyweds may also create a joint email id where all bills, etc can be emailed to. This will ensure that each can access them.
Change the beneficiary or nominee at banks and other places to be the spouse. You may also make a Will as doing so will prevent legal problems or family discord in case of an unfortunate demise of any one of the partners.
- Check insurance coverage
Review your insurance coverage options like life insurance, health insurance, etc. and check whether any of it needs to be increased and how to add the spouse in the cover.
If parents are financially dependent on you, then their health coverage needs to be checked as well. As they grow older, their health costs are likely to go up. Hence provisions for that have to be made.
Ensure that all insurance is in order and there are no missing or duplicate papers.
- Trust and be aware of each other’s finances
In traditional households in India, the man usually takes care of all the expenses and the woman is usually unaware of all the money matters. This is wrong as the wife will be completely clueless as what needs to be done in case of emergencies. Hence, each spouse should be aware of all the finances.