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POSTED BY ON April 4, 2013 7:49 pm COMMENTS (12)
How should a newly married couple start their financial life? What could be the possible list of financial targets?
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Dear Sonal, thanks for the clarification. my take is on the lines as discussed by dear Ramesh above. Both of you should sit together & discuss each & everything now, after 6 months, after marriage & of course after that continuously at least once in a month.
thanks
Ashal
Dear Ramesh, you rightly said that most of the things just depends upon the mutual understanding. I just listed down some goals which could be most of the couple’s goal. I feel that keeping 6-8 month expenditure in hand (liquid fund) helps in meeting on-the-way expenditure and it also gives mental satisfaction. And regarding points 9 and 10, as of now they are just bullet points only.
Dear Ashal, we have plan to construct a home in my home town. We are not yet married and our home towns are different.
Dear Sonal, a small clarification needed from your side? Is it my home town or our home town for house construction in point no. 8 above?
Thanks
Ashal
Thank you every body for putting all your thoughts into this topic. As Manish said that such topic would increase the quality of the forum, I very much agree with that.
This question came to my mind as I am getting married with in a year time. We both working professionals and will be 26+ by that time. And I want to have a sound understanding of financial life with her.
Its necessary to change all the ‘I’s into ‘We’s.
If I correctly foresee our financial needs then those would be
1) basics like term insurance and health insurance
2) health insurance for our parents
3) 6-8 times of monthly expenditure in liquid fund
4) short term goals just to maintain a good life style
5) holiday/vacation expenditure
6) retirement planning
7) 1 yr goal of buying a car
8) 5 yrs goal of constructing a home at my home town
9) 20 – 22 yrs goal of children education
10) 26 – 30 yrs goal of children marriage
All these can be categorized into three broad goals what Manish talked about.
Thank You
The most important part will lie with understanding yourself as well as each other. The aspirations and outlook of both of you will be different and unless you both understand each others, all others things are mostly just patchwork.
All of these things are ok, but not necessary. You should be able to understand the basic principles of all these things and then implement them. Blind acceptance of others’ opinions (others include the so-called experts on this forum including me, as well as everywhere else) is a way to disaster, which may or may not occur!
Eg. point 3. 6-8 times of monthly expenditure. Why 6-8 times and not 12 or 24 times? or Why is it even required? 6-8 is a general average and not necessary suitable for you.
Another eg, 9 and 10. Are you two really want children or is that just a lot of peer pressure? or Do you want them after say 5 years, in which case the goals will change. Do you really need to think about a 30 year goal of Marrying your child which is not even born? There are lots of things which you have to think, if you really want to.
Depending upon your outlook, what I have mentioned above may or may not be suitable for you. But, good luck.
Ramesh
though it may seem negative thoughts , one may keep following points suggested in a blog, which i think , all we read, in some other context, in view :
1.Have a joint account for EXPENSES, but not for salaries and Investments: If you are at the starting point of your marriage, do not rush to make all your accounts ‘Either or Survivor’. It is perfectly all right to continue to keep your accounts as E or S with your mother or father – as you were doing BEFORE the wedding.
2.Nominating your spouse is all right, unless you are worried …….
3.Normally when you get married it makes sense to change the nomination of all your life insurance policies. However if the policies are not too big, and there is no big loan commitment jointly made with your wife, let the old policies remain with the old nominees – say your parents.
pardon me if i have stated above unnecessarily.
4.
And If people start asking these kind of quality questions, the forum would be a different place altogether 🙂 ..
Sonal
Very good question and very relevent one . Atleast better than other usual questions 🙂
I would say that marriage is a very crucial event and your financial life direction is determined a lot due to marriage . Because now you are two people and both of you might have different opinion on what you should do in next 1,5,10,and 30 yrs .. One mistake , and it can bring a lot of issues due to inconsistency of thoughts and then fights and grudges are there.
its commonly seen that due to no planning, a couple takes random decisions which just go on with the flow of life for example
– Baby much earlier then needed
– Buying house very later/earlier
– Not focusing on strong career’s
– High/low lifestyle and due to that low surplus left for future or unsatisfaction in life etcetc
Its hard to believe but at times one small mistake taken can lead to a very bad financial life years later , because a small mistake effects will multiply over time .
So here is what you have to do
– Sit down and dedicate one full day to design your financial life next 3-10 yrs . List down what is not that important to achieve and you will not focus on those things . Put down your 1st priority and how you will get it, then 2nd , then 3rd ..
Like a couple 1st priority can be to accumulate 20 lacs in bank before they do anything . Then just do that, each action of yours have to lead to only and only that goal . Obviosuly you should do few things before that like covering yourself through a term plan , health insurance etc etc, but those are one time activities, I am more focusing on middle/bigger goals in financial life .
the other goal for example can be to buy a house in next 3 yrs, with atleast 50% downpayment ..
The third goal can be to have a baby only and only when you have 2x income compared to 1x expenses, so that you can give a better life to baby . Some people bring their babies so early in life , when they are not ready financially , that they suffer themselves and let their baby suffer all life because they have no MONEY !
Thats what I had to say on this matter , a lot things were my personal opinion , please ignore them if they do not match your way of thinking 🙂
Manish
Manish,
Planning for a baby and timing a baby is very important. However unfortunately it is a luxury only young (< 25) couples can afford. For older 'new' couples (which is very common these days) delaying a baby can have other consequences, financial only being one of them.
This is a complex issue and finance is only one of the factors.
Yes agree .. my comment was more for those who can plan things out, but do not do any careful thinking .There are other elements in life , which are important , agree to that !
Dear Sonal, first of all the 2 ‘my’s should become 1 ‘our’. I.e. before marriage, My goals – husband was thinking something & My goals- wife was thinking something else. So first of all these 2 My goals should become a common our goals. There ‘ll be some sacrifice from husband & some from wife. All the things can come later on.
Please share your views.
Thanks
Ashal
emergency fund: 6-12 months worth in a savings account + liquid fund
enough pure term life insurance for both if both are working. To be increased later when you have children
enough individual health insurance in addition to that offered by employer
start saving at least 15-20% of take home pay each towards retirement.
List other short and long term financial goals and see how to invest for each.
start investing in diversified equity mutual funds for long term goals.