6 financial planning tips for newlyweds

Normally the discussion of financial planning starts after 1-2 years of marriage, but to derive the actual benefit out of it and to keep your life in order it is important to start discussing the financial matters much before, maybe as soon as you get married or even before getting married.

Finances play an important role in keeping your married life happy. Unmanaged money matters, a different attitude towards money, disagreement towards saving or spending, may derail your newlywed bliss.

If you are not among newlyweds and are either a bachelor or have been married for quite many years now, then I would request you to forward this article to the concerned in your circles, and do your bit for their Wellbeing.

Concepts shared here, may also get applied to all couples who have not yet started with any kind of financial planning at any level.

This is the first and most important aspect. You both should know each other’s financial past, behaviors, attitude towards money before moving ahead with preparing any strategy towards financial management. All it requires is, to be honest, and give all your ears to your partner. Don’t hide anything from each other, your Income, Assets, and Liabilities.

Discuss all financials like if you are running education loan, Car loan, personal loan, investing in SIPs or having RDs to support some annual goal. Be open to your partner.

The most important rule in this discussion is “No Blaming”. Your Partner may not have managed the finances as good as you did, or h/she might have a bad financial past. So don’t just pass the judgment on the money management ability. This exercise is just to learn about another person, with an attitude of understanding. Later on you both need to work out a set up that works out good for both of you even if you have different approaches.

You both need to change your mindset from “this is mine”, “this is yours” to “this is ours”. Sometimes from tax planning point of view, you may need to separate the accounts and tax files, but that doesn’t mean any separation taking place.

I have seen in many families in initial years of marriage, there’s always a lack of trust. In-laws don’t trust Daughter in law, Son under the influence of Parents don’t discuss finances with the spouse, daughter in law also don’t trust in-laws in money matters and thus keeps her finances separate and undisclosed to husband and in-laws. Everyone has its own justification of their actions. But I believe that no relation can go on for long if there’s no trust.

Everyone in the family should respect each other’s financial freedom and also work collectively towards family goals, then only things get worked out.

Now you are family and there must be some common goals which you both wants to achieve, which may include own house, vacations, Retirement, Children education and marriage. But there may be some separate goals too like for e.g. your spouse may want to leave job and start something on his/her own, or she wants to continue supporting her parents financially even after marriage or someone of you wants to take a break and go for higher education …all such goals should be discussed among each other in advance so the necessary provisions can be made in family’s finances.

Some goals may lead to a delay in family planning so the emotional acceptance of these goals should also be there. See, for better relationships, the key is financial independence. The more one feels free, the more h/she be contended and contributes towards common goals. More you support him/her in achieving personal goals, the more the other person reciprocates in the same way.

Tax planning should start well before the wedding, as your better half may help you and your family in saving considerable tax outgo.

If your wife is going to be a housewife with no other income, then you may create a good tax file in her name by accepting all wedding cash gifts in her name, and also by giving cash gifts to her. Gifts from husband to wife or in-laws to the daughter-in-law attract clubbing provisions, but gifts received on the wedding are tax-free.

After that, you may decide to form an HUF and create another tax file in the family to save more on tax.

These tax files work best with Business persons and Professionals, which further helps them in taking loans and save more taxes on interest payments.

Start working on Family’s cash flow. Create a family and personal budget and try your best to stick to it. In fact, also help your partner to stick to the budget. Be an external auditor to your partner’s expenses. Being aware of your expenses are important to create and follow a budget approach.

If you both have separate Bank accounts, then you may plan to open a new Joint account for family expenses and use your personal accounts for your personal expenses and goals. This will create the necessary discipline to you both, with no overlapping on personal and family expenses.

Once you are done with the basics of knowing behaviors, prioritizing goals, understanding cash flows, now is the time to strategize the process off by writing a Financial Plan. Financial Plan will put you into a process and eliminate the behavior biases.

You may take professional financial planner help to get you organized with money matters, He may help you in prioritizing, allocating your surplus to debt prepayments, long & short term goals, advise you on important insurance and tax matters and may help you in doing your investments as per your risk profile.

The 6 financial planning tips mentioned above are very basic ones and these should be considered as only a start. If you follow these steps, then you will not find much difficulty in managing the other financial complexities you face in your married life and be in a position to manage the emergencies with confidence.

I know it is going to be a difficult task to start with, in fact, finances are always the last thing that newlyweds would like to spend time on. But this is also true that finances are one of the reasons of disputes between couples. So when you have vowed to spend your rest of life with each other, why not plan it for betterment. The more thoughtfully you work together on financial matters, the more financial harmony you’ll maintain in your life together.

Good Moneying!! Happy Married Life.

Do you have some financial planning tips for newlyweds? Do share your tips and also experiences in the comments section.