"All marriages are happy. It's the living together afterward that causes all the trouble."
THE tongue-in-cheek humour of Canadian playwright Raymond Hull says it all about the importance of mutual harmony in marriages. Apart from a symbiotic relationship between the spouses, what makes married life fulfilling is the sense of financial stability. A married couple assumes a joint responsibility of important aspects of life including financial matters. The great Indian wedding season is on and keeping that in mind, Like any other important tasks, financial planning for new couples begins with identifying mutual objectives, both short term and long term. For instance, a vacation abroad or buying a new vehicle would fall under short term goals whereas long term goals may include decisions regarding children and moving into a bigger home.
Start Early:
Financial planners say that as the first priority, young couples should plan their budgets jointly. The key is to plan early and stick to the plan. Also, the financial plan should be flexible enough to take into account the changing needs of the young family. As a part of the strategy, couples need to take into account their current monthly income from salaries and assets, including mutual funds, equity, property and others. The monthly expenditure of the couple should be mapped against the assets, which would give a sense of average possible savings in the future. In addition, the couple would need to determine very quickly if they are going to stay in their parent's home or live independently.
Get The Basics In Place:
For couples who decide to stay with their parents, it becomes rather easier to draw a financial plan since the accommodation is taken care of. However, in metro towns, couples are increasingly staying independently, and for that, one needs to arrange necessary accommodation on a priority basis. With property prices in most metro cities close to their all time highs, young couples may not be able to immediately purchase a home. In such cases, they need to consider rental expenses while chalking out monthly budget. Another aspect for independent couples is to plan for home furnishing. Insurance is another important factor. The couple would need to ensure that they have suitable health insurance for themselves. In addition, they should purchase a suitable term life insurance policy, taking into account their income and expenditure pattern.
Contingency Fund:
The recent global financial crisis also impacted the job market in India. And even though the Indian economy is currently one of the fastest growing worldwide, financial planners say that one still needs to be prepared for a temporary loss of employment. While loss of an employment can be difficult for a young couple, but sufficient funds at hand, can minimise the pain,". In such situations, one should set aside funds that are adequate to meet at least six months of a family's monthly expenditure, including loan payments. However, if both are working, financial planners say that the contingency fund could be even 3-4 months of family expenditure.
That's because such a couple is assured of at least one income to help them get through any loss of employment, without disturbing their lifestyle significantly. To meet this objective, financial planners suggest that 10-12% of the combined monthly income could be set aside, in fixed deposits or debt schemes of mutual funds.
Planning For Long Term Goals:
To meet long-term goals, such as meeting the down payments required for purchase of a home or funds needed to bring up children, substantial funds are required. Financial planners say that a couple could set aside 8-10% of their combined income for investments in SIP (systematic investment plan) equity schemes of mutual funds or even invest directly in stocks. For instance, 10,000 invested each month would amount to nearly 7.35 lakh at the end of five years assuming an annualised return of 8%.Marriage is a joyous event, and systematic financial planning goes a long way in retaining and nurturing the bond between couples.
