Newlyweds’ Guide to Financial Planning

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Marriage is about starting a life with someone special and sharing responsibilities both familial and financial. As newlyweds, you both bring in your own assets, liabilities, spending habits and future plans together the moment you take your wedding vows. But trying to combine these can be a very stressful task and so we bring to you a short guide for now it’s time for some financial planning vows.

The term ‘finance’ can be a little intimidating at times. It’s important to be aware of the investment options available to you but don’t let the mumbo jumbo of the financial world hassle you. New investors – Keep it to the basics. The must haves are – a systematic investment plan, a public provident fund account, a term insurance and a health insurance policy. Now it’s time to move forward.

Once you have decided to combine your incomes Knock off loans with high interest rates and no tax breaks. Education loans, Home loans and Personal loans for specific requirements are ones eligible for tax benefits. The use of the term ‘specific’ is deliberate and be fully aware that Personal loans come at a cost as they are unsecured and which is why they must be your last resort and the first to be knocked off.

Next is to Draw up your short, medium and long-term financial goals. Albert Einstein accurately identified power of compounding as the eighth wonder of the world. Keeping funds idle in the bank account is easy but unwise. It’s time to tactfully multiply them. For very short term requirements use fixed or recurring deposits to park your money. If there’s a chunk of money you do not foresee using for the next 9-12 months try money market liquid funds. They provide higher returns and are free of lock ins. It is advisable to have a mix of equity and debt investments in your portfolio for bulky returns for the long term goals like child’s education, your dream car, a world tour and your retirement. With 70% of your portfolio skewed toward equity will be your best bet.

Once you’ve aligned your goals, set up a Rainy-day fund. 30% of the combined monthly income must be set aside for unforeseen future expenses. With lifestyle changes and increase in disposable income, raise the contribution to this contingency fund time to time and build up for the long run.

Yes, we live in very busy times but Quarterly money meetings over a cuppa coffee are a must. It will help you notice if the expenses stack up against the budget you had initially projected. If not, alter your requirements and not the budget. Besides, discuss new avenues to multiply investments as our income never grows at the same pace as the expense.

Being financially stable requires teamwork and effort. As a newly married couple, you have time and opportunities by your side. Budgeting, saving and investing are key to achieve your life goals together. So do it now and do it right.

By Anantya N.

Posted: May 2018

 

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