Don't let knotty financial issues weaken your marital bond.
Heavy liabilities of one partner have the potential to sour a new relationship.
So, develop a plan for how you will deal with these, experts tell Chirag Madia.
Illustration: Dominic Xavier/Rediff.com
When Ankit Shah, a Mumbai-based businessman, was getting married, his spouse-to-be indicated she did not wish to continue working after marriage.
Since they would have only a single income stream, and also have to support the joint family in which they live, Shah realised he would need to be more careful about saving and investing in the future.
Together, the couple decided Shah would begin ploughing his savings into mutual funds and create a corpus for emergencies.
Traditionally, discussing money and finances has not been a priority for newly-wed couples or those engaged or planning to get married soon.
In the past, it was even considered uncouth. This is changing and rightly so.
Financial planners say couples should discuss money and finances at an early stage in their relationship.
While the subject is touchy, if swept under the carpet it has the potential to cause disputes at a later stage.
1. Set goals
At the start of their journey, a couple should discuss their goals and aspirations.
Your spouse and you might have very different priorities. Discuss and try for a consensus.
Your spouse might seek the stability that comes from owning a house. You may hold the view that a house would unnecessarily tie both of you down to a city and you would rather be free to move to the place with the best career opportunities.
"Couples should discuss and plan for the next two-three years after marriage. They should make a list of short- and medium-term goals. Estimate monthly expenses after marriage and decide where the balance amount should be invested, so that these goals can be achieved," says Suresh Sadagopan, founder, Ladder7 Financial Advisors.
2. Plan pre- and post-wedding expenses
Marriage expenses are no longer the sole responsibility of parents.
Many young couples nowadays take up at least part of the burden of meeting the wedding expenses upon themselves, often splitting the costs.
While this is a positive development, youngsters sometimes take personal loans to fund these expenses and fall into a debt trap.
"I have come across several cases where the couple spends endlessly during their honeymoon and racks up huge credit card bills, which they then find difficult to pay off. So, it is important to create a budget of how much they will spend during and after the wedding, and stick to it," says Pankaj Mathpal, founder and managing director, Optima Money Managers.
3. Partner's credit profile
If one partner steps into the wedding with a heavy baggage of personal loans and credit card bills, it has the potential to create a fissure in what is still a fragile relationship.
"Couples should discuss their personal loans and how they plan to re-pay these. In India, people don't talk about liabilities. Later, these become the cause of arguments among couples, and affect both their financial and personal lives," says Mathpal.
In such cases, it's best to be transparent with the partner about the existence of such liabilities.
It is also fair to pay off those bills oneself, instead of expecting the partner to share the burden.
4. Attitude towards risk
The two partners can have attitudes towards risk, usually conditioned by investment habits of their parents. One partner could have grown up in a family whose wealth was built through steady investments in mutual funds.
Such a person will naturally be attracted towards the capital markets.
The other partner might perceive equities as being too risky, and may prefer bank fixed deposits and gold.
Such differences in risk appetite need to be discussed and sorted out.
If the differences prove irreconcilable, the couple should seek help of an investment advisor.
5. Avoid loading up on loans
If both the spouses earn, they become eligible to take bigger loans. Avoid the temptation to avail of these loans.
It is not certain for how long you will remain a double-income family.
When the baby comes along, it is possible you might revert to becoming single income.
Many people still have education loans when they get married. It is not always necessary to pre-pay the loan, since you are entitled to tax deduction on the entire interest amount (without any upper limit).
In the matter of a car loan, don't go for the highest loan amount your combined salaries make you eligible for.
Instead of going for the biggest car you can afford, go for a smaller, more practical option, to not burden yourself too much.
Similarly, go slow in the matter of buying consumer products for the house, especially if you are going to fund with loans.
The couple should ensure both have adequate life insurance.
If a person's income is going to support not just his spouse but also his parents and unmarried siblings after marriage, he should buy enough life insurance in view of his onerous responsibilities.
After marriage, the couple should move from their individual policies to a family floater, which is likely to be less expensive.