When Mumbai-based couple Divya Kapadiya, 24, and Darshak Vadhaiya, 30, decided to tie the knot in 2022, they were undecided on spending the money set apart as the budget for the wedding celebrations ― Rs 5 lakh. COVID-19 uncertainties were still around and they didn’t see merit in spending what they thought was a “bit much”. So, when they finally got married last week, they opted for a court marriage. As a result, they saved Rs 3 lakh. Vadhaiya tells us that they earmarked the savings for the medical emergencies of their parents.

LET’S TALK MONEY

When you get married, you generally talk about family, children, a future together, assimilating families, and so on. But it’s equally important to talk about money. The husband may like over-spending; the wife might be frugal. The wife might be a risk-taker, while the husband might be conservative. Yet, both typically, would have common goals. It’s important to find common ground. Money conversations early on in marriage save a lot of time and grief later.

“Everyone has a different outlook on money. This makes it necessary to hold discussions regarding money,” says Amol Joshi, Founder of Mumbai-based Plan Rupee Investment Services.

“Some of the issues that should be addressed are savings in various accounts (i.e. single and joint) considering taxation aspects, account access, and information availability, financial planning and regular reviews of the plan,” says Anup Bansal, Chief Business Officer, Scripbox.

EMERGENCY CORPUS

A prudent approach to start your financial journey is to begin with the creation of an emergency fund. Though personal finance experts generally recommend six to 12 months of expenses to be kept in a safe fixed deposit (FD) marked for emergencies, it may not work here. Most newly-married couples may not know their spending patterns immediately after marriage.

“Simply agree on a round figure or any amount that you are comfortable with, as a contingency amount,” says Joshi.

As you move on in life, you will get an idea of the right size of the emergency fund.

If you have dependent parents, then having a separate medical emergency corpus for them, like Kapadiya and Vadhaiya did, will be useful during uncertain times.

PLAN YOUR INSURANCE                                                      

You might have your own insurance policies in place when you get married. But after marriage, it’s good to have a common family floater. Here, you can even add your children later.

Joint insurance also works if you decide to go for a home loan in the future.

Adhil Shetty, CEO, BankBazaar.com, says, “It's advisable to review and enhance life insurance coverage, as the couple's circumstances and responsibilities change, such as starting a family, buying a home, or acquiring significant debt.”

SINGLE OR JOINT ACCOUNT?

Both life partners would have individual as well as common goals. They need to decide how they will fund these plans.

Here, there are no hard and fast rules. But most planners recommend couples to have their independent accounts too, and a joint one as well.

“Whether to have separate or joint bank accounts is a personal decision and depends on the financial goals, spending habits, and comfort level of each spouse,” said Sanjeev Govila, Founder, HumFauji.

A joint account may come in handy where joint expenses need to be paid for. For example, a jointly taken liability, such as a home loan, can be paid through a joint bank account. A single bank account can be used to pay down an existing education loan or to carry out specific investments, such as contributions to PPF, and NPS, which may be an existing account.

If you are comfortable, you may also want to change nominations to your existing bank accounts and investments.

The single or joint account, there’s needs to be communicative. Also, one partner might divert his or her salary towards paying off loans, while the other one’s salary might run the house and make joint investments. That’s fine. Just talk to one another, be open and in agreement. Retain access to your money, but don’t misuse joint finances, such as to fund an impulsive expense at a time when you are still paying off your debts or saving up for an important common goal.

MANAGING LOANS AND DEBT 

In today’s world, loans are inevitable. These could be in the form of education loans, personal loans or credit card loans. These have become an integral part of our lives.

Sharing information about pending loans with your partner makes life easy.

Vadhaiya had discussed outstanding loans taken for house renovation before the wedding. He says, “I have taken the responsibility of continuing to repay the monthly installment of Rs 14,000 against this loan after the wedding as well.”

“Repayment plans should be clearly discussed and put in place before taking on any further debt,” adds Bansal.

“If the debt is not large or it could not be discussed before marriage for some reason, it should be disclosed to the other partner at the earliest opportunity. The couple should then discuss how to handle it, how it may impact their joint finances and agree on a plan,” says Govila.

For large loans, ideally, there should be a plan in place to pay them down as per the EMI agreed. If one partner doesn’t work and the other one does, the working partner must have a strong re-payment plan in place to take care of the needs of the family in case of the untimely death of the working partner.

If you have taken a loan, and are facing difficulty in repaying it, talk to your spouse. Keeping such things secret can lead you to extreme steps like selling off family jewels at a later time, which could create marital discord.

INVESTMENT STRATEGY FOR FUTURE GOALS

Vadhaiya tells us that for now he and his wife plan to continue with their existing investments. But they have promised to keep each other informed. As they move on in life, they will build an asset allocation that will help them achieve their long-term financial goals, he adds.

“By having a joint financial plan, you and your spouse can work together to achieve common financial goals like saving for retirement, buying a house, etc.,” says Shetty.

Keep it simple – that should be the key to starting a joint financial life. Avoid complex products. But the need to start saving regularly goes up manifold after marriage since responsibilities and goals increase. In the initial times, avoid getting into complicated investments that may need long-term commitments. As you get familiar with each other’s money habits and your joint financial goals, you may want to create an investment plan.

Talk. Communicate. Be open.