Marriage is not just about figuring out a life between you and your spouse, but also about shouldering responsibilities for both your families.
If you are planning to get married soon, you must start paying attention to your finances. Marriage is not just about figuring out a life between you and your spouse, but also about shouldering responsibilities for both your families. Your post-marriage responsibilities are bound to grow, and they will bring their set of money-related challenges. Therefore you must start thinking about how you’re going to tackle them.
Here are some thoughts to get you started and boost your pre-marriage financial health.
Have a marriage budget
If you want a large, colourful wedding with hundreds of guests, you’ll need a large sum of money for it. In Indian families, the couple’s parents tend to do all the heavy financial lifting. However, you must do your bit to contribute to curbing expenditures. Assess your money needs based on the various wedding events, number of guests, catering needs, clothing and jewellery purchases, transportation, etc. Be prepared to make your own contributions to ease the burden from your parents’ shoulders. If you’re opting for a low-key wedding—well done; you’re about to save a lot of money. If raising the money for the wedding is a challenge, consider taking a personal loan, or a loan against security. Go easy on your credit card because over-using it and not being able to settle the immediate card bill in full could hurt your credit score and credit utilisation ratio. The key is to spend within your means. Remember that this is a one-time event on which there will be no return on your heavy expenditure. Therefore, if you choose to take a loan, do so within limits.
Make your bookings early
Closer to the date, especially during a wedding season, you may find prices of services rise steeply. Make your bookings as soon as you can, especially with regard to marriage halls, travel tickets, and hotel bookings. With surge pricing active even on trains now, you will want to avoid paying higher sums of money later on.
Consider getting insurance
Weddings are costly affairs, and often involve couples or parents of the couples spending large sums of money that they have been saving all their working career. A wedding cancellation close to the date can cause huge losses to all parties. Which is why some insurance providers offer marriage insurance. Such products cover financial losses due to cancellation of marriage due to specific reasons such as natural calamities like earthquake, fire loss, theft, or due to the demise of a relative in blood relation within a week of the marriage, or due to death or accident of bride/groom. However, no claims are entertainment if the marriage is cancelled due to a dispute between the wedding parties.
Prepare a corpus for your life upgrades
As an unmarried person, you may be enjoying your income since your responsibilities are fewer. After marriage, you may need to take care of your spouse’s wants and needs especially if they are not earning an income. Therefore assess your future money requirements, and how it fits with your current income.
For example, you may now be living in a single bedroom home, but after marriage your space requirements will increase and you may need a bigger home. At present, you may be using public transport but marriage may create a need for owning your own vehicle. These life upgrades may require you to have a higher income. Therefore, take a look at where your income is, and how many of these changes you can afford to accommodate into your new life. It would help you if you start building a corpus that would help finance some of these changes. Saving money in a recurring deposit or debt mutual funds is a good way to start off on building this corpus. Having this fund would ensure that you’re not under immediate pressure after your marriage to find the money for your upgrades. You will be ready with the funds to make those changes.
Inculcate a habit of saving
Savings could be done by cutting down unnecessary expenditures. You could start off by eating at home, being careful about lifestyle upgrades for clothing, holidays, and electronics. You can reduce eating out or partying. Have a budget for your expenses and keep track of where your money goes. This would help you realise the importance of curbing wasteful expenditure, and help you a develop the mindset in which you start thinking of ways to spend less and save more. These steps would lead to massive monthly savings. Over a period of time you’ll find that you have built yourself a nice little purse of money that you could invest in instruments that would provide you high return.
Plan your investments
You and your spouse will have life goals. These could be divided into short, medium and long term goals. To finance these goals, you need money. Each of these three kinds of goals requires carefully selecting the right investment instruments. For example, going on a holiday could be a short term goal, therefore you need liquidity to achieve it. Having a child may be a medium term goal, and you need cash and medical insurance to get through it. Buying a home and planning your child’s college education are long term goals, and you could build these corpus with equity-linked instruments. You must start thinking of how you’re going to meet each of these goals using your current income. And while you’re at it, you’ll also have to consider your tax liabilities. While you have your whole married life ahead of you to think these things through, it would be wise to start putting aside at least 10-20% of your take-home income into investment instruments, no matter how small your income may be.
Marriage brings a lifetime of managing problems together with your spouse. Dealing with these problems become easy when there’s trust in each other’s abilities. Trust comes from talking to each other about where you are in life in terms of your career, family and money, and stating your positive intentions about where you want to go from that position. Problems of money are especially tricky and have the potential to bring friction in marriages. But you are life partners, and you need to have the support of each other while making your big money decisions. Therefore: communicate, reinforce mutual trust, and take on your challenges together.
The author is CEO, BankBazaar.com