With the wedding season already in full swing, a few things to keep in minutes financially when tying the knot, advises Bindisha Sarang.
An adage says a lot goes into making a marriage right.
And the first step is getting the wedding right.
With the wedding season already in full swing, here are a few things to keep in minutes financially when tying the knot.
Before the wedding: Even before getting married, it is a good idea to know the financial life of your partner.
Kiran Telang, a Mumbai-based certified financial planner, and author of Mindful Retirement and Moneywise-Perspectives for Women, says, "Before getting married, a discussion on financial views would help, including spending and investing habits. A mismatch in temperament could lead to disagreement later. It's important to know how the other half handles money before marriage."
"For all you know, one partner could be the kind that saves kind, the other a big spender. Research shows finances are the biggest cause of divorce."
Start on the right foot
There are traditional ceremonies and western ceremonies like bachelor parties, which have now become the norm.
Pankaj Mathpal, Founder and Managing Director, Optima Money Managers, says, "Budgeting becomes very important for pre-wedding, wedding day and honeymoon expenses. One way to avoid going overboard is by clubbing ceremonies on the same day. Many do pre-wedding shoots by hiring expensive locations like palaces. The same can be done in a scenic local beach or park."
All experts say unless you are filthy rich, you should be mindful that it's the beginning of a new life and you can't spend more than you can afford on every function.
Ideally, in India, parents set aside money for children, some have to save on their own, some even take loans.
These are unsecured loans that can be used to meet the expenses such as booking the venue, food and catering, lodging facility for guests, conveyance, purchase of jewellery, trousseau, and honeymoon package.
Pankaj Bansal, CBO, BankBazaar.com, says, "A vanilla personal loan from a different borrower might actually come with a lower interest rate compared with a wedding loan for the same amount and tenure. So it is essential to compare options across different banks and NBFCs before taking a call."
Most expert advice against taking loans for the wedding.
Pankaj Maalde, Mumbai-based certified financial planner, says, "We have seen even when parents are funding weddings, there are those who take personal loans to throw lavish bachelor parties or other events. That should absolutely not be the case. Why get into debt when you are starting a new life?"
If you don't have enough money to take care of your wedding expenses, borrowing from family and friends may work, as such a loan would be interest free.
However, if that is not an option, selling your investments is marginally better than taking on a huge debt.
With the threat of another lockdown due to the new Covid variant, does it make sense to buy wedding insurance?
Naval Goel, founder and CEO, PolicyX.com, says, "Considering that a wedding involves huge expenses and several parties from organisers' side are involved, risks are inevitable. So people can buy wedding insurance in order to stay financially protected in case any monetary loss takes place due to any uncertainty. The insurance usually has a cancellation coverage."
Wedding insurance also provides liability coverage against any third-party claim during the wedding due to theft, fire, burglary, accident.
The cancellation coverage includes postponement due to a sudden or unexplained reason.
Note, however, that if the groom or bride or any of their families plan to call off their wedding once and for all, the insurance company won't be liable to pay.
Damage to property due to fire and other related threats such as earthquake, or burglary or theft is also covered.
Personal Accident leading to death, permanent total or partial liability of people including blood relation and relatives is included.
Goel says, "It is important to file an authentic claim along with bills and FIR. If the insurance company discovers any flaw in the claim, it has the complete authority to deny the claim."
Premiums vary on a case by case basis, and range between 0.5 and 2 per cent of the sum assured.
If you are planning a destination wedding or multi-day affair or are otherwise spending a substantial amount, you should consider buying this.
But if it's a small private affair where you have kept the budget modes, you can skip this totally.
Once you have tied the knot, the logical step is to update all necessary paperwork.
For instance, address changes across your investments and bank accounts.
Telang says, "Money is a very sensitive topic. So, you should do this gradually after a year or so when married life settles down. Remember, up until now you have not shown your finances to anyone, and for many opening up immediately might not be easy."
If either partner has changed his/her name after marriage, then the change needs to be made in all financial documents.
You would have to start by updating your permanent account number card and passport.
Experts also say that adequate health and life cover should be bought to cover both spouses.
When it comes to money management, there are two schools of thoughts.
Telang says, "If both spouses are earning, they may want to maintain their individual financial identities. But some financial aspects need to be handled as a team."
For instance, both partners could contribute towards household expenses and family vacations even as they maintain their individual financial identities with separate accounts and investments.
Maalde says, "Some couples pitch in with equal amounts towards expenses, others pitch in proportion to their salary."
This style works well for many couples who prefer to not merge their financial lives totally.
Telang says, "We have seen many cases in which a woman's money goes towards all expenses and the husband's money goes towards investments. If the marriage fails, the woman is left with nothing in her account. If you have separate accounts, you can work it out by mentioning co-ownership on the papers."
Some experts, however, prefer a different style where financial lives are merged and everything is done jointly.
There's no wrong answer here. It depends on the couple.
You might want to approach a professional advisor who will help you with budgeting, financial goal setting, investments, and a financial road map for your journey as a couple.
- What are your short-term goals, together and separately?
- Which expenses are you actually going to split?
- What is a reasonable amount to spend on those things?
- How will you decide together about larger purchases?
- What kinds of purchases are needs, what kind are wants?
Feature Presentation: Aslam Hunani/Rediff.com