Isn't falling in love one of the sweetest thing to have happened to mankind? Yes, of course.
After spending plenty of time with your sweetheart the day of the reckoning arrives. Your would-be spouse pops the inevitable question: Will you marry me? And you feel that there can be no place in this universe better than earth. Not even Eden.
However, after accepting the proposal a pesky question crosses your mind: How are we going to manage finances after marriage? And, perhaps, all the hell breaks loose.
If you too are going through the same situation then here's help. It always helps to discuss matters financial threadbare before marriage so 'you can live happily ever after'.
Remember that getting married is one of the biggest decisions that you make in your personal lives and marriage matters a lot for financial planning as well. These are some of the important issues which need to be discussed both before and after the wedding:
1. Figure out the big picture together
Financial planning is sometimes divided into separate parts like investment and insurance but they are all connected and part of a larger whole. It's this big picture that you need to decide together as early as possible: your long-term career goals, your retirement plans, buying a home and so on.
Once you have built a shared vision the individual issues will be much less of a problem.
2. Investing
You should discuss how much money you will need at retirement and what investment strategy to follow. Of particular importance is the amount of risk you are prepared to take which will determine the kind of investments you make.
Differences of opinion aren't necessarily a bad thing in investment. For instance a good portfolio should have a mixture of risky and safe investments so if one of you prefers to take risks and the other plays it safe there is no reason why you can't do both.
3. Budgeting
The flip side of investing is budgeting: sticking to a spending plan so that you have adequate money to invest in the first place. You need to come to a broad agreement on how much you will spend and save every month.
Any big spending decisions should be taken together while you should be flexible about smaller purchases.
4. Bank accounts: Joint or single?
Both have their advantages. A joint account promotes a sense of unity and also helps in keeping track of expenditure.
Some couples, on the other hand, may want the independence that comes with separate accounts. Perhaps one solution is to have one joint account for household expenses as well as a pair of separate accounts.
Even if you choose this it's important to decide together how much money to put in the different accounts.
5. Buying a home
This is probably the biggest financial decision early on in any marriage and needs to be discussed thoroughly between you and your spouse. If both of you work, you will want a place which is reasonably close to your respective workplaces. You also need to consider how many children you want and whether the parents will be living with you.
When you do buy a home one of the questions is whether it should be jointly owned. For a number of reasons this is a better solution than single ownership.
For one thing if both individuals are earning, joint ownership will help when it comes to obtaining finance: both in terms of raising a bigger loan and paying a lower interest rate. Joint-ownership provides tax benefits as well since both the husband and wife can claim individual deductions under Section 24 of the Income Tax Act.
6. Insurance
Marriage has big implications for insurance particularly if the family is heavily dependent on the earnings of one spouse.
In that case life insurance as well as disability insurance is highly desirable and your insurance cover should increase with every child.
Health insurance is also important and you need to find out how much, if any, insurance your employer provides for your family.
Even if such insurance is provided it may not be sufficient and you may want to buy additional cover.
Once you and your spouse have settled these financial matters you shouldn't wait for a moment more to say "I do'.
