Getting married? Few financial planning tips

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Updated: July 25, 2015 12:09:15 PM

Marriage, apart from a new beginning, entails a fusion of two separate financial setups. To put it bluntly, it's not an easy task.

financial planningA majority of people don’t pay much attention to updation of financial documents after marriage. (Reuters)

Marriage, apart from a new beginning, entails a fusion of two separate financial setups. To put it bluntly, it’s not an easy task, as the couple needs to work out a comprehensive plan for expenses, savings and investment, keeping in mind various short-, medium- and long-term financial goals. Here are a few ways to build towards pre- and post-marital financial bliss.

Communicate

Talk openly about your finances to ensure that you understand each other’s spending habits. Try to find out answers to questions, such as are you a spender or a saver, what is your approach to money, and so on, and assess whether your partner’s strengths could help counter your weaknesses and vice versa. Even otherwise, knowing both approaches to money can significantly smoothen financial discussion and planning. Ensure that both of you understand each other’s spending habits, current credit card debt, loans, future plans, how your accounts will
or won’t be blended after the wedding, and so on.

Financial documents

A majority of people don’t pay much attention to updation of financial documents after marriage. Name and address changes need to be incorporated in the passport and PAN card. Bank account and demat nominations also need to be altered apart from changes in beneficiaries for insurance policies, mutual funds or bank fixed deposits.

Insurance and investment planning

You need to review insurance requirements in the wake of added responsibilities. If both partners are working, it is advisable to buy new life insurance policies nominating each other as beneficiary. For existing insurance policies too, beneficiary name needs to be changed. With ever-increasing medical costs, it is important to have a sufficient amount of family health insurance and personal accident cover. As the couple might have investments, such as mutual funds and fixed deposits, which they might have started before marriage, now is time to consolidate them. This should be done keeping in mind the financial goals.

Maintain account book

Maintaining a notebook or even a diary wherein you write your accounts is important. Recording the statement of income and expenses is mandatory for financial success. After marriage, one person needs to take charge of maintaining books of accounts, recording income and expenses and keeping bills and payment receipts.

Getting married involves sharing your hopes, dreams and life. Do not shy away from clearing the air on financial issues. Talking through money matters builds the foundation of trust and establishes the good habit of sharing financial information, expectations and worries.

Happily Married:

1.Ensure that both of you understand each other’s spending habits, current credit card debt, loans, future plans, how your accounts will or won’t be blended after the wedding, and so on.

2.If both partners are working, it is advisable to buy new life insurance policies nominating each other as beneficiary. For existing policies too, beneficiary name needs to be changed.

3.After marriage, one person needs to take charge of maintaining books of accounts, recording income and expenses and keeping bills and payment receipts.

4.With ever-increasing medical costs, it is important to have a sufficient amount of family health insurance and personal accident cover.

The writer is an associate professor of finance and accounting at IIM Shillong

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