Effective money management lessons for young couples

  Marriage is certainly one of the most dramatic phases in an individual’s life. If you had a big fat Indian wedding with all pomp and splendour, chances are that you would have spent more than your fair share of money on it. So, when you and your partner start a life together, worrying about the finances would be the last thing on your mind. But that should not be the case. As unromantic as it may sound, financial planning is a key factor in the success of a marriage. It has been found that finances do play a part in causing stress in relationships. After all, trusting your partner with the finances of the family would be a huge burden off your shoulders. This would also inculcate a sense of security between the two of you. You should know that the first step in attaining financial intimacy is to improve communication on money matters. Here are some pointers on how you can improve your money management skills. Buy insurance Insurance planning is a must for young couples as they do not have assets that could cushion the impact of a financial downfall. If the income of the household is impacted in any way, the financial safety net of insurance will offer you the much-needed protection. If you are a young couple, chances are that either of you would be starting off on a new job. During this time, a lot of responsibilities hinge on your income. Setting aside money to build assets would be your immediate future goal. But what if you face an unprecedented event like a disability or death? This is where an insurance policy with sufficient coverage would be a godsend. You can choose to insure your health through medical insurance plan. Remember that the cost of buying insurance when you are young would be much lower than what you would have to bear at a later stage in life. Also if you both drive frequently to work, the personal accident cover under your motor insurance would help in securing your life on the roads. Choose adequate coverage for your vehicle so that you do not have to foot hefty bills after an unpleasant event like an accident. Debt matters Young couples should ideally deal with the shadow of debt together, regardless of who was responsible for availing it in the first place. One thing you should understand is that living a debt-free life is possible, but it is not always the smartest thing to do. The most important thing to be aware of is that there are good debts and bad debts: Good debt - A good debt can actually be considered as an investment that will grow in terms of value and may also be a source of long-term income. Taking a personal loan to fund your education is an example of a good loan. This is primarily because education would only increase your value when you are part of a workforce. It also has the potential to grant you a higher income in the future. Similarly, availing a home loan can also be considered as a positive debt. The low interest rates on home loans are an attractive proposition; the tax savings are noteworthy too. If you pay your home loan EMIs on time, you can see a notable improvement in your credit score as well. The increase in value of the home over the years would actually cancel out the interest that you paid over the same timeframe; so isn’t it a win-win situation from all angles? Bad debt - Over the top credit card dues are examples of bad debts primarily due to the fact that such debts carry high interest rates. As far as credit cards are concerned, it is ideal to stick to a “financial diet” when you and your partner start a life together. It is easy to get carried away swiping your card for all payments due to the sheer simplicity of the process. But you should chalk out a monthly budget and stick to it so as to not derail your financial strategy. Tax planning If you and your spouse have similar earnings, you can plan your finances together in order to minimise the tax outgo. In line with this, you can take the assistance of an experienced tax advisor or use a tax software on the internet to arrive at a feasible solution. Always remember to set aside a little extra cash to sustain the household in the event of a shortfall or emergency. Save together Mobile providers, life insurance companies, and even gym facilities offer reduced rates when you opt for a service jointly. So it makes sense to save together this way. Also, jot down your financial priorities and agree on what you plan to achieve first. It may be purchasing a house, clearing your debts, starting a family, or any other such goals; the idea is to have a list of your top goals together and work towards it. You can start with each one of you listing down your goals independently and then creating a combined list. Making a budget is useful in keeping track of your expenses. When you examine your joint expenditure, you will be able to identify areas where you tend to overspend or even waste a lot of money. Budgeting gives you wider choices on where you can save and spend. The financial benefits of being married is usually one of the last things that young couples consider after marriage. By living together and pooling your incomes, you can create a pool of savings over a period of time. Discussing about your financial plans (that includes retirement) is a sure-shot way to get to a state wherein you are financially stronger together. This will also serve you well throughout your journey.