Recently I met some family friends, who were busy preparing for their son’s upcoming wedding. After a few minutes of pleasantries, the conversation meandered its way to financial planning and money management. As the couple would be starting their life in a new city, it was but natural that the parents were worried. They included me in the conversation looking for a professional point of view.
It struck me that there was plenty of advice that I could impart to a newly married couple that could help build a sound financial foundation for their new lives together. Just as the seven wows of marriage help towards a good relationship, these seven financial wows will keep you in good financial health, providing a solid foundation for life.
1. Promise you will not go overboard
Young couples are very excited to start their new lives. They are easily carried away while setting up a new home and indulging each other. They end up spending far more than what may be good for them. Yes, one needs a comfortable home and romantic getaways. But always remember living a lavish life, using credit cards indiscriminately and not thinking about savings can lead to financial blunders that will permanently damage your financial health.
2. Never, ever, hide a rupee of expenditure from your spouse
Let this be the mantra of your life. Yes, each of you needs some personal money. Decide upon a fixed pocket money for each, anything over and above it should be accounted for properly, this is essential to maintain your financial health. A hidden credit card will be the death knell to your financial management and eventually the relationship. If one of the spouses is spending money without informing the other, it could easily lead to chaos, as the other may be planning on payment of bills and other important expenses without knowing about the missing money. Stick to your financial plans and goals, be it paying the monthly bills or planning for a home or retirement. Don’t jeopardize your financial safety.
3. Chalk out the long term goals together
Talk and plan about your futures together. Share your long term goals and work on them together. If one of you decide to save for retirement and the other is saving separately for an international vacation you may both end up with nothing as there may not be sufficient funds. So sit down and decide what needs to be done first, creating a nest egg, planning for a home or spending on a vacation. Decide and work together on your goals.
4. Plan for your retirement
To newlyweds this may seem like a distant future and youth may lull you into a false sense of security. But remember, in this fickle world, the one definite thing is, growing old. A time will come when you won’t be able to work and make as much money as you do now. With increasing inflation you will require much more to maintain your current life style or maybe even a modest one. So start planning, not just for when you expand your family but also for old age. If both of you are working it makes sense to take advantage of the retirement plans offered at your jobs and use them both. Start early to give the old you a good advantage.
5. Create an emergency fund
It may seem like a stretch on your budget, but create an emergency fund. Open a joint savings account in a bank that you normally don’t use, and set up an automatic transfer. It should not be too easy to access (to avoid temptation) and at the same time you should be able to access it in an emergency. An emergency could include accidents, illness, car breakdowns, loss of job and similar stuff. A vacation or an expensive gift is not an emergency.
6. Balance between today and tomorrow
Preparing for emergencies, creating funds for retirement, future and home are all essential financial decisions, but at the same time don’t get so caught up in saving for the future that you make your today miserable. Learn to create a balance between the two. Don’t live like a miser and at the same time curtail non-essential and luxury expenditure.
7. Strengthen your marriage and relationship
Life may not be a bed of roses, but make it a happy one. After a couple of years of living together, couples fall in a rut and most of the time spent together is passive. Make it a point to have at least one meaningful conversation daily, where you discuss about each other’s’ day, non-personal stuff like world affairs, may be some gossip, anything that makes you click. It may seem like a tough task once kids come but it is then that the conversation will keep you stronger and together. Enjoy each other’s company, go on regular dates (not necessarily expensive), and make time for each other because eventually the kids will leave the nest and you will have just each other.
I would like to end with a simple mantra, always remember that you can’t have a great relationship unless you can communicate and agree about money matters. Start financial management early in your marriage to give yourself a strong foundation in life.