Personal Finance Priorities for Young Married Couples

Marriage, in financial context, sounds heavy, especially in case of young Turks just starting on their career paths and not yet considering themselves stable in their line of profession. More so, in the context of our country, where lavish marriages are a trend, involving expenses beyond the personal capacities of the individuals getting married.
Personal financial situations may vary a lot from one individual to another. Yet, regardless of our financial situation, the steps to achieving a smooth financial life and a happy marriage can be generalized for everyone, beginning with the commutation of household environment.
First, we begin with the differences marriage can bring to your financial environment and importance of stability in financial condition. The issues that you must pay heed to after marriage to adjust to the new environment are as follows:

Parent’s Indulgence
Before marriage, many of us whether men or women, involve our family members, especially parents, in our own financial matters, mostly for old age wisdom and to minimize our own headache of managing money ourselves.
Post marriage, you will find that this habit of your spouse (where both of you are earning) a bit baffling. Remember though that it goes both ways, and first thing to do for you is to discuss with your spouse as well (even if only one is earning), even when you want to continue consulting your parents about your money management.

One is Two or Two is One
Before marriage, our financial decisions are sometimes reckless, as there is no one to questions it and there’s no responsibility (esp. if there’s no responsibility). New influx of money and financial freedom is exciting enough to make everyday a celebration, and even if account balance goes to zero before the end of the month we don’t feel stressed about it, after all payday is just a couple of days ahead.
Post marriage, this scenario will require rethinking, as it may play a spoilsport with your plans and relationship (esp. for men). Post marriage, one must shun the old solo run habits and focus on life from the two point of views, this may slow you down a bit but ultimately will be paying off in the way of a peaceful and happy married life.

I am the Expert
Some of us by experience and by knowledge, or even simply by interest, start to seriously indulge in our financial matters early on. Before marriage, that may seem like a perfect life and a series of robust decision making spree. This will build lot of confidence in you regarding your financial matters.
Post marriage, this confident can be deadly if your spouse is earning and looking for financial control. In such scenario there is generally one choice left, you both say, ‘I am the expert,’ and start managing your finances separately, but this can be upsetting, not just for you but for the kids (if your marriage lasts long enough), and for all future financial decisions, as the issue of who handles what will arise each time. So the experts must file for consensus on financial matters and manage everything jointly instead of keeping a curtain in between.

Utility or Fun
Under current environment, singles are less willing to spend time and money on utilities like - washing, cooking and other household chores. It’s almost like returning to bed after a party; i.e. you don’t want to but you must, and therefore, priority to such needs is low in this phase, but changes dramatically after marriage.
Post marriage, utility takes the center-stage, while fun activities must also remain important consideration. A comfortable household is a position which should be a priority post marriage for both you and your spouse. Providing for all may not be possible at all times but, if some time is devoted towards planning fun activities along with fulfilling initial family expenditures, it is easy to overcome this hurdle, while keeping the enthusiasm up and running.

Planning for emergencies
Our risk taking capacity is high while running solo and perhaps some of us have already tasted success or failure in risky ventures before getting married. Before marriage, only emergency planning required is for self, additionally parents are also there for support. At maximum you require a Personal Accident Policy, a Health Insurance and some amount as your emergency fund.
After marriage, with the addition of another individual in your life, requirement of such emergency measures and more reaches a new zenith. If the other partner is not working this responsibility falls completely on the earning member, and proper emergency planning is essential for a stable financial future.

Planning for Future
This is something which should start even before you start to plan for marriage, as money is going to be your constant partner, savior and friend whether you marry sooner or later. Only difference is, before marriage our concern is mostly with our own needs and we may not worry much about our long term goal. Though, some of the goals must be acted on early, while marriage will add some more whenever it happens.
Initial liquidity needs are important, and must be taken care of while saving for the long term goals. Even financing marriage expenses can be a goal for single individuals. After marriage, goals merge for the couple and that’s where the challenge will be for newlyweds.

Motivations for Prioritizing Personal Finances
I understand that in order to undertake any venture you need to find right motivation to accompany you on the way, and thus given below are few reasons why setting your personal financial priorities after marriage could be important:

• If you are the sole earning member:

1. Financial Stability will take some time, your professional growth is important
2. Remember that you must plan for yourself and your spouse
3. Well prioritized finances will allow you space to pursue your profession without worries of financial stress
4. Keep the mental stress away, which may build quickly in current work environments
5. Finally keep your family safe from financial worries in case of emergencies and untoward incidences
6. In case of your disability spouse will know how to take care of financial matters

• If both of you are earning:

1. Making decisions together will save the family from blame game, as financial loss of one can affect the other as well.
2. Savings is easy but combining your money can be even more rewarding
3. Planning together can be fun.
4. Iron out differences of opinions and de-stress over future financial goals
5. Involving your spouse in your financial planning will make both of you feel more inclined towards family’s future.
6. It’s easier to plan for increasing the family too.
7. In case of emergency your spouse will know what to do to pull additional resources

Personal Finance Priorities for Newlyweds
Now that we are rightly motivated and clear about what we want out of such exercise, let us have a look at what all should we account for while setting up family finances in place? Discussed below is a comprehensive list that you may consider for your new family:

1. Talking Money Matters
   Money talks are as important for newly married couples as the talks for expensive vacations and getaways; after all it’s the money which will provide for all of it in the end. The least expensive and most productive ways to spend your weekend together is by putting your finances in place, deciding on future course of action and building credibility and sense of responsibility between the partners over money.
   Benefits of monetary transparency are enormous between couples, for example: it instills a sense of relief in the other that their partner trusts them, and in return they will feel open to undertake responsible position in case of money matters.
   If your spouse is working, it is more important to open up about financial matters especially for the one earning more. The simple reason being, the higher earning spouse will consider himself to be more capable of handling financial matters. This sense of superiority leads to the temptation of hijacking the process and dictate terms to the lower income partner. This may lead to discord, and it is advisable for a smooth sailing marriage that equal representation is given to both the partners.
   Discussing them over your free time will allow you to experience free flowing of creative ideas to finance not just your goals but your aspirations while strengthening your relationship further.
2. To Become One or Remain Two
   This is one of the most contentious of issues between partners, especially when both of them are earning. Usually when parents are involved with both spouses in their personal money management, their suggestion is to keep the finances separate, but as partners in life you are expected to handle your lives together, and so the financial matters.
   If not complete some level of transparency pays in not just keeping your finances in place but also ensuring peaceful and healthy environment in the house.
   For single income couples the earning member must strive to make arrangements for his/her spouse to become financially independent in future, it benefits in two ways:
   
   1. Increase income and tax savings within the family
   2. Be financially safe under emergencies
   For double income couple as well, saving taxes can be a great advantage of joining their finances together, and planning for their combined financial future.
3. Update Financial Documents
   Financial documents are most important piece of records, holding the key to access most of your resources. After marriage it becomes the foremost responsibility of the couple to update their new status in their financial records, for smooth functioning of financial transactions.
   These records include:
   • Bank Accounts
   • Provident Fund Accounts
   • Insurance Policies
   • Mutual Funds holdings
   • De-mat Account etc.
   Especially for women it is imperative that they update their information in all such places to avoid any hassles in receiving or making payments due to change in their name. Also remember that for some financial instrument spouse takes precedence in nomination over all other relatives, i.e. EPF, health policies, life insurance policies etc.
4. Deciding on Lifestyle Expenses
   Planning does not mean you should live an ascetic life devoid of enjoyment, instead both of you should be able to enjoy your money together as well, this brings us to the lifestyle expenses. Cutting on lifestyle for future goals is advisable only when there is practically no other option. Though, it is advisable that you remain within your pockets, you should work on maintaining a lifestyle which is healthy, both from physical as well as financial point of view.
   Typically in the initial years it is difficult to hold on to the line, but slowly with some efforts discipline must be inculcated in financial matters within the family to increase savings. Once again, this step will involve both husband and wife whether both are earning or any one of them.
5. Gear up for Emergencies
   Financial emergency preparation involves following two aspects:
   1. Insurance Policies
   2. Emergency Funds
   While insurance policies are easier to purchase, one should be careful with the benefits available in Health Insurance, Personal Accident and other policies. For example, checking whether your health insurer will only provide ‘cashless hospitalization benefits’ or also ‘reimburse your doctor visits or regular health checkup bills’ can be a good point to start with.
   For life policies ensure they cost less and the claim procedure is simple. A qualified financial advisor or wealth planner can be engaged to decide the correct amount of insurance cover required. Inadequate insurance may make financial life of your spouse difficult after you in case you are the sole earning member.
   For emergency funds, it is advisable to take expert help, but to start with you can target at least ‘three months’ of total household expenses. This pool comes in handy and keeps your financial worries at bay in situations of job loss or disability.
6. Planning for Goals
   Imagining your future financial goals may not be a difficult task, but structuring them into attainable and scientifically defined objectives may require more than casual imagination. It is advisable that you involve a professional wealth manager / financial planner to plan all your goals along with your emergency planning. Here is a list of some common goals which hold their importance for almost every family, especially the ones just starting:
   • Self-Education
   • Household appliances, Furniture etc.
   • Vacation
   • Retirement
   • Home Purchase
   • Car/Vehicle purchase
   Before you start to plan for kids, these are the foremost goals you should pay attention to. In brief planning for these goals will require you to define the following for each of them:
   1. Time to achieve the goal
   2. Amount required to provide for the goal
   3. Amount you can invest now to attain the amount in point ‘B’
   Defining some of the goals may be tricky, for example the retirement goal where it will be difficult to imagine an amount that will be able to provide for your post retirement expenses. The trick is to start with something, and go for expert assistance as soon as possible.
7. Budgeting the Household Expenses
   The old but effective method of disciplining your expenses is by budgeting them in advance. Though detailed budget preparation may not be possible for everyone, a simpler method can be followed by dividing the expenses in two parts:
   1. Fixed expenses
   2. Variable expenses
   Fixed expenses are those outflows which are least controllable, for example: House rent, car / home loan EMIs, etc. While variable expenses are those which are mostly in your control, for example: weekend splurge, clothing, furnishing, and other lifestyle expenses. This should provide you ample scope for modification and creatively adjusting those expenses which are somewhat in your hands, by either postponing them or reducing them. A budget in the end provides a direction and framework for your money to flow and not simply be lost in the daily commotion.
8. Saving and Investing
   In the final stage, when you have the amounts available for your expenses and the amount required for goals, your task is to start putting your money through your plan. There is sometimes a gap between what you plan to save and what you can, given the amount of income and expenses. In such situation it is important that some compromise is reached between savings and expenditures, simple reason being – “time will increase money, the penny invested now will become much bigger over time than the money invested in the later years.”
9. Review Your Plan
   Planning so meticulously done can be quite relieving in itself. Though, it doesn’t permit us to abandon it completely for the future. We must return to it on regular basis to account for the changes and monitor the progress. Beware of panic or overconfidence though, when we have plenty of aspirations, a little money can make us dream bigger and lose patience. Remember, “Time will increase the money”.
10. Ask for Help
    It pays to get a professional advice and plan to improve your financial position. If it is already good, then you can strive for greatness in it, if it is great then strive for sustainability of this great financial position. A qualified wealth manger / financial planner can be very effective add on to your planning process, and really add value to your already detailed plan.