Financial planning is not important just among single investors but among married individuals as well. Prudent financial planning helps couples to meet certain common financial objectives and ensures that money is the last subject that causes friction among married couples. It’s important that a couple sets common financial objectives and is transparent about their investments as marriage is a union of two ways of life, salaries and situation, in situations where both the individuals are working. After marriage, individuals often have to adjust a lot towards common ground such as parenting, lifestyle, and lastly money. In this article we will focus on five financial planning tips for couples.
Do’s and don’ts of financial planning for married investors
Following are a few financial planning tips for couples that might come handy to you:
- Create a budget
Irrespective of the situation concerning you being single, soon-to-tie-the-knot, or already married, setting up a monthly budget is one of the necessities for a hassle-free financial life. This is truer for investors who have already tied the knot as both the spouses can clearly define their income levels and how they are planning to use it. You can use several free apps to track your monthly budget and ensure that you are on track. You can make a budget for small-term financial goals, mid-term financial goals, or long-term financial goals.
- Net income and compulsory expenses
After successfully setting up your financial objectives as a couple, it is time to account your monthly income flows as a couple. This will aid you to allot wealth towards common financial objectives – be it short-term, mid-term, or long-term. This will also help you to evaluate the sum of money left for savings after paying mandatory bills such as student or home loan, rent, credit card bills, groceries, utility bills debt, insurance, monthly expenses, tax, etc.
After taking into account your monthly expenses, it is important to evaluate how much you need to save and ultimately invest to meet your financial objectives. Certain financial experts or advisors to cough up this sum before considering your obligatory expenses. A couple can choose to mutually decide this among themselves basis their current financial position. In cases where there is no scope inheritance from relatives or family members, savings become even more important.
- Try to keep your accounts separate
Keeping separate account could be quite beneficial from taxation point of view. You can make your spouse a joint account holder in your mutual fund investments as well as your bank account. However, to achieve a sense of financial independence, a joint account could be avoided in the early years of the marriage.
- Emergency corpus and health insurance
COVID-19 pandemic was a harsh reminder to several family members to ensure that they have a proper health insurance policy. In India, one of the biggest reasons for families slipping to below poverty line (BPL) is rising healthcare related expenses. Apart from that, it is important that you have an adequate emergency fund in place. You must allot at least three to six month of your living expenses towards this corpus.