Financial planning for newlyweds: It can also be a marriage of your finances

The big fat Indian wedding season has started! The Band-Baaja-Barat company will get going from November to around the middle of February next year. Thousands of couples will tie the knot and take their vows. This is where you can find help figuring out how to balance your finances, money promises, and knots to untie for these newlyweds for a happy financial future.

New beginnings

Marriage is a time when you move from independence to interdependence. It’s not about you anymore; It’s about doing things together, including planning your financial future. “It is important that you are transparent about your income, assets and liabilities from the start,” said Priya Sunder, director of PeakAlpha Investment, a Bengaluru-based wealth management service. For household budgeting and spending, you determine who is better with finances and therefore better suited to become the money manager. However, keep the other informed about household expenses and investments. “The couple should review their expenses and savings every quarter to see what needs to change. This keeps extravagant spending at bay, encourages you to live within a budget, and pursues family goals and expenses on an equal footing, ”says Sunder. It’s also important to let each other know if you’re going to be spending on some large lots so that the costs are decided jointly. “Establish the money rules early in the marriage. If you don’t get that balance, it’ll be difficult to change later, ”says Sunder.

Build on each other

Decide whether you want to open joint bank accounts or keep separate accounts. Most financial advisors will recommend both types for you. Keep the joint account for household expenses and transfer your monthly contributions to this account. You can keep your old segregated accounts for your personal expenses, savings and investments. Also, determine whether it is advisable to add your spouse on your credit card. Although getting married does not link your previous credit histories, it does link your accountability and creditworthiness in the future. That said, if you have combined credit accounts, bad credit history from one will also negatively affect the score of the other.

Also keep the paperwork for all your documents up to date. If you move after the marriage, give your bank and insurance company your new address. If you have changed your name, it will need to be updated as well. You may want to change the nominations and beneficiaries of your investments and insurance coverage.

Inform the employer

If you both work in the same organization this is a must. In fact, some companies have a policy against it and one of you may have to quit. Check with your human resources department for your company’s policies on mating. However, the main purpose of informing your employer is to ensure that you can enjoy each other’s services for employees. Find out how your employer extends insurance – life and health – to your spouse. In addition to insurance, if your spouse is a non-earning member and your dependents are entitled to other benefits, such as: B. You can claim your medical bills. It is common for new couples to plan a lot of vacations.

“If both receive vacation travel allowance or LTA that is granted to one person twice in a 4 year block, they can take 4 trips in 4 years and claim a tax exemption for the LTA,” says Archit Gupta, co-founder, ClearTax.in an online tax planning and filing company. If you are living on the rent and both have the HRA component in your salary, make sure the lease includes both your names. Otherwise it will be difficult for me to take advantage of the tax relief at the end of the financial year.

Insurance, EMIs and Investments

Newlyweds need to work together to make important decisions about their financial strategy. Your insurance portfolio may need a new edition. Consider increasing your life and health insurance coverage, especially if your spouse is out of work. You might want to get family floater health insurance that covers both. Do not hesitate to take out insurance, as the premium increases with age.

Couples are also entitled to some tax breaks. For example, if one of you has a higher tax bracket, investments can be made on the spouse’s behalf in the lower tax bracket to reduce tax expenses. says Gupta. You can also invest in stocks or equity funds and only sell them tax-free after one year, as long-term profits are exempt from this. If you are planning a house, take out a joint housing loan. “This will also help you to save more taxes as both partners can claim the interest deduction up to“. 2 lakh individually, which increases the total limit to `.4 lakh,” says Gupta.

However, it is important that each partner is financially secure himself. “Sometimes the wife’s income is used to fund monthly expenses, while the husband’s income is used to fund home loans. If there is a separation or divorce later, the husband is entitled to the entire property because he paid the EMIs, ”says Sunder. This can be avoided if both partners share in the expenses and build the system together

Start talking long term

“Set financial goals early in the marriage,” says Sunder. While your responsibilities may have increased, staying together would lower the cost of living, especially if both are earning. Even if one of the spouses doesn’t deserve, your saving ability will be much higher than it would be after the children arrived, until you are just two of you. The expenses will increase significantly.

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