In India, marriage is considered a life- long bond and a sacred commitment for both partners. Indeed, marriage is the institutional basis for creating and nurturing a family.
With increasing urbanization, consumerism, pressures of living as a nuclear family, high career orientation and aspirations of both the husband and wife, lack of any support mechanism, it is important for the couple to work towards and arrive at a high level of financial compatibility for the long-term success of their marriage.
Like the “seven vows” of a Hindu marriage, let’s also look at the “seven steps” that both the partners have to sincerely work towards:
1. Financial profile
Different people have different attitudes towards money. Some are conservative and comfortable living within a budget as long as their “basic needs”are taken care of, while some others are spend thrifts, do not like living within a budget, have an ever growing list of “wants and desires” to live life with maximum comfort and convenience.
A situation wherein one person is conservative and frugal and the other one is a spendthrift will lead to conflicts hence a joint profile has to be agreed upon as your financial destiny now is linked.
2. Future goals
A list of common future goals has to be discussed, agreed and executed jointly. After the list is made, prioritization of each item in the list is to be made by writing down the target date and the amount against each goal
- Buying a house- by December 2017 – Rs 50 Lacs
- Expenses for the house furniture, fixtures, consumer durable (like washing machine, refrigerator etc.) – By January 2018 – Rs 4 lacs
- Buying a vehicle- by April 2018 – Rs 5 Lacs
- Starting a family – by April 2019
- Child’s education expenses
How much is the past debt incurred by each person? What is the monthly repayment flow? By when will the debt be repaid? Who will repay and how much is the amount?
These questions have to be discussed and amount to be recorded.
4. Monthly income and expense budget
Assuming that both are currently working, what is the net take home salary of each? From this total pool, how much will be the allocation for saving for the goals (as above) and for meeting the regular monthly expenses?
Each item of monthly expense has to be listed (write down the item name and amount)
Who will share which expense and what will be the sharing ratio?
What will be the minimum amount that both partners commit to save every month towards their joint goals? (This is the most important part of your joint financial plan)
A ll these details have to listed down in a diary or in an excel spreadsheet.
5. Savings and investments
After the expenses, what will be the total monthly savings pool available and contribution of each partner? Where will the savings be invested?
From opening a joint account in a bank to investing in medical and life insurance policy, then investing in fixed deposits, stocks and mutual fund SIPs
A joint financial plan is to be arrived at and recorded after discussing all the above
Remember, you can either make this plan on your own OR take professional help from a financial planner.
6. Who will take the lead in financial matters?
After the joint financial plan is arrived at, any one partner can be in charge of monitoring, recording and implementing the plan. The other person will play a supportive role.
7. What will be the review process?
Decide on a particular date (say 10thof every month) when both of you will discuss and review the current status of the joint financial plan. Review minutely the expenses versus the budget to ensure that you do not overspend.
Ensure that your joint monthly savings are automatically invested in a mutual fund SIP (systematic investment plan)
Consult your financial planner OR investment advisor to ensure that you follow these seven steps.
8. Discipline, commitment and patience
Both of you have to ensure that you follow the above seven steps with total discipline, commitment and patience
Do remember that financial compatibility also changes with time and a constant alertness, mutual understanding and joint and sincere efforts are required by both partners in executing the above seven steps.
This will ensure that your long term financial future and indeed your marriage itself will sail through smoothly in the turbulent ocean of life.
All the best!
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