Financial planning becomes more important after marriage. Your responsibilities double, and your expenses quadruple. Dealing with uncertainty becomes difficult if you and your spouse are not on the same page in terms of finances. Many modern couple face relationship issues because of poor financial management. In order to ensure a healthy relationship, it is critical to split bills and focus on the right aspects of financial planning.
How can couples plan their finances?
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Prepare a budget
You should plan for all small and large expenses with your spouse immediately after your marriage. Determine the necessities, fixed expenses, and variables. Keep your list of extravagant expenses as short as possible. Once you both have created a list, try to stick to it.
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Set Priority
Expenses are endless. You and your spouse must decide on a list of them that are the most important. For example, if you have a school-age child, their school fees must be deducted from the combined income. Similarly, medical expenses for ailing parents, debt EMI, and insurance premiums must always take precedence over others.
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Create Joint Account
If both you and your spouse are working professionals, there should be a joint account for common expenses. Transfer a fixed income from your salary to this account and set up an auto debit feature for expenses with a fixed payoff date, such as EMI, school fees, and insurance premiums. Keeping your expenses separate helps to strengthen your relationship with your partner.
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Avoid Credit Cards
Credit cards make life easier, but they also have a long list of drawbacks. Consuming even slightly above 30 per cent reduces your creditworthiness. Stop swiping cards at every counter and use your debit card instead. This helps you in keeping your debt low and makes you more eligible for availing emergency funds through a personal loan. Moreover, failure to repay the consumed amount will result in a monthly interest penalty of 2-3%.
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Split Money
You must always split the monthly expenses. This should be done in proportion to each other's income. Consider an example- Suppose your monthly expenses total Rs 60,000. You and your spouse earn Rs 80,000 and Rs 40,000 per month, respectively. In this case, your contribution should be proportionate to your income. You can discuss this among yourselves and find a way that fits you right.
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Decide on Expenses
Be specific about which bills should be borne by whom. For example, one may choose to pay for internet expenses while the other may pay for electricity and other utility bills. If one of you is having difficulty repaying debts, the other should assist financially to avoid tarnishing your creditworthiness.
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Align your goals
Always have short and long-term goals in mind. You should plan your savings and investments accordingly. You should mutually agree on common goals, such as purchasing a new house or car. Retirement planning must also be done together to live a happy life. Not having these conversations with clarity is a big mistake.
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Focus on Investing
The financial market provides various investment opportunities. Some of these are ideal for achieving short-term goals, while others aid in accomplishing long-term objectives. For example, direct equity investment or mutual funds are ideal if you plan to buy a car within the next five years. Both the National Pension Scheme (NPS) and the Public Provident Fund (PPF) are options for retirement planning (PPF). Sovereign Gold Bonds (SGBs) are ideal if you or your spouse enjoys gold but prefers to keep it only in paper form.
Also Read: How do I invest Rs 25 lakhs to generate a monthly income? -
Build an Emergency Reserve
Apart from bill splitting and investments, an emergency reserve is also essential. Check that you have sufficient liquidity in the form of physical cash or funds in your account. It helps you deal with uncertainty, such as job loss for you or your spouse or a medical crisis in the family.
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Invest in Insurance
Get insurance for yourself and your spouse. Even if you are both are covered by group health insurance through your respective employers, you should prioritise individual insurance. Another option is a family floater plan. Covering the entire family in a separate plan can be costly, so consider a family floater plan in this case. Health insurance protects against medical inflation while also providing tax benefits.
How should you and your spouse handle a financial crisis?
Sometimes financial crises are so severe that emergency reserves and insurance are insufficient. In such cases, a
personal loan with a maximum funding amount of Rs 5,00,000 is your best option. Furthermore, the repayment period can range from 12 to 60 months. If your expenses are substantial, you may wish to consider mortgage loans.
Also Read: How Personal Loans Help During An Emergency Final Words
It is easier to manage expenses if you and your spouse contribute in proportion to your income. Divide your expenses, open a joint account, invest some of your money, and never deviate from your monthly budget. If uncertainty strikes and neither of you is financially prepared, a
mortgage or personal loan can help.
But it is very important to have these conversations with your spouse. One or both of you must spare some time every day to develop financial knowledge and learn more about investing and saving schemes.