8 MinsNovember 22, 2019
As the bride/groom-to-be, along with shopping for the big day and hitting the gym to get in perfect shape for the D-day; make sure you also plan your savings and expenses for a blissful financial future as a couple.
Sure, you want to ensure all arrangements for the wedding ceremonies are perfect so that it will be a memorable affair. But also remember that a change in relationship status has a bearing on your personal finances and the way you manage your
So, take a couple of minutes and read this post; it can help you keep your financial matters healthy and serve to be in the interest of your long-term wellbeing.
Before you go into the specifics, first engaging in sensible and mature money-talk is essential to understand each other’s outlook towards money --- what money means to you. Discuss the financial goals the two of you envision/aspire and
how you intend to fulfil those goals. At the same, take cognisance of your current financial situation for a realistic assessment, and speak openly about the liabilities (what and how much you owe) as well; because you don’t want money
matters to sour your relationship going forward.
Initially, with dual income and no kids (assuming both of you earn for a living), also talk about the expenses you would share jointly. It is important to understand how both of you will accomplish certain larger and vital financial goals in life,
such as buying a home, child’s future needs (education and wedding expenses), and retirement, among a host of other financial goals.
Here are a few specific things you need to do set the house in order:
Keep a check on excessive splurges, monitor your spending habits, take control of your personal finances, and safeguard your financial future.
A savings account is fundamental to manage personal finance. So, irrespective of your economic strata, what you do for a living and your residential status, you must have a savings account. At least
one joint account is a must for married couples and the rest could be held in individual names with a nominee.
Particular savings accounts can be assigned for certain purposes: to pay utility bills, transfer money, receive money, shop, to address contingency needs, to invest, etc, based on your planning.
Invest in productive avenues – Savings alone has never made anyone rich; investing wisely has. Hence, your hard-earned money needs to be deployed prudently in productive investment avenues, so that you earn a higher rate
of return, counter inflation, effectively address long-term financial goals, and thereby achieve financial security.
When you invest recognise your age, risk profile, broader investment objective, the financial goals you aim to address, and the time horizon for each goal, and then choose appropriate investment avenues.
Since investing is an individualistic exercise, do not blindly follow what other couples do. Follow a personalised approach while you endeavour to build wealth together for your financial wellbeing.
From a diversification and asset allocation point of view, it is wise to hold some money in bank Fixed Deposits (FDs) for fixed and safe returns. When you choose the tenure of the
FD, consider your liquidity needs and the investment time horizon, whereby premature withdrawals can be avoided.
You may even consider a Recurring Deposit (RD) facility, to build wealth systematically, provided you do not skip an instalment and/or prematurely encash your investments. The
RD can be opened online with a monthly instalment of as little as Rs 500 with no maximum limit.
Invest to grow your wealth - For your financial goals that are more long term in nature, you could look at investing in mutual funds, provided you have the stomach for some amount of risk. There are various categories of mutual
funds – equity, debt, hybrid, solution-oriented, and so on with various sub-categories under each. Every type of mutual fund scheme has its distinctive investment objective and strategy. Hence, choose mutual fund schemes judiciously
to match your broader investment objective and financial goal/s. You can consult a financial advisor to choose the right mutual fund as per your needs.
[Also Read: Fixed Deposit Vs Recurring Deposit: What should you choose? ]
Insure yourself optimally – When it comes to insurance, your objective should be indemnification of risk, whereby your dependents are safeguarded from a financial loss in the case of an unfortunate event.
That being said, it is important to buy an optimal life insurance cover assessing your Human Life Value -- a prudent/scientific approach—rather than deciding on it arbitrarily. Use Axis Bank’s Life Insurance Calculator to estimate the life insurance cover you need.
Axis Bank has tied up with life insurance companies Max Life Insurance and LIC of India to offer life insurance plans.
Similarly, in times when healthcare costs are skyrocketing, having an optimal health insurance cover is a must. If you are hospitalised and do not possess health insurance or, have a sub-optimal health insurance cover, it could drain you financially.
For your health insurance needs, Axis Bank has tied up with Tata AIG General Insurance and Apollo Munich Health Insurance. Opt for the health insurance plan that best suits you.
Have a contingency plan in place – Life throws unpleasant surprises at us. Events such as layoff, critical illness of a family member, medical expenses, natural calamities unexpected expenses (house repairs, fixing a car
breakdown), come without a warning and it can have serious ramifications over your personal finances. Thus, maintaining an emergency or rainy day fund (also known as a contingency fund) is also important over and above insurance.
Your emergency fund should be up to six months of regular monthly unavoidable expenses, including on-going loan EMIs (Equated Monthly Instalments) if any. Plus, if there is a medical history of you and your family members, add 5%-10% extra for
Parking money in a separate savings bank account and/or a term deposit or an overnight/liquid fund, are suitable options for contingency planning purpose. And in case there is a shortfall when an exigency does crop up, availing a Personal Loan
can be an option.
Choose and use your credit card wisely – Spending some money on short-term gratifications and on things you need, is also essential. Make it point to use your credit card when you shop—whether online or offline. This
is because with a credit you can make most of offers and discounts deals, enabling you to save as you spend (in the form of reward points and cash-back offers).
Moreover, a credit card can help you manage cash-flows better, convert high-value purchases into EMIs, enjoy an interest-free credit period of up to 50 days, and even withdraw cash during an emergency. Note that responsible and prudent use of
this plastic money can be comforting.
If your better half is dependent on you, consider gifting an add-on credit card. A smaller limit on the credit card can prove handy to him/her.
Axis Bank offers a variety of credit cards; opt for the one that suits your specific need and use it wisely.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.