10 financial tips for newly-weds to thrive financially and emotionally

You have recently celebrated your marriage and may still be reveling in the joy of your special day. However, once your honeymoon concludes, it is essential to engage in a discussion about each other’s significant financial objectives. While you may have maintained sound financial practices individually, the dynamics of sharing expenses and living together will necessitate some adjustments to your financial strategy.

It is crucial to establish a mutual understanding with your partner regarding expenses, savings, investments, and other financial matters. Although this may appear challenging, it is vital. Below are several key considerations for newlyweds as they develop a financial plan:

1. Determining the Primary Earner

A significant aspect to address post-marriage is identifying who will serve as the primary earner. This involves deciding whether both partners will need to work to sustain the household or if it can be managed on a single income. To reach a decision, newlyweds should evaluate all factors that influence their lives, as numerous elements will impact this determination.

2. Organizing Household Expenses

Another critical task is to compile a comprehensive list of anticipated household expenses, both recurring and one-time. As you embark on this new chapter with your partner, it is prudent to include a buffer in your initial estimates.

3. Clarifying Financial Accounts

While it is advisable to maintain separate bank accounts for convenience, particularly for tax purposes if both partners are employed, it is also important to establish a joint bank account. This account should be opened with an initial deposit that reflects the monetary gifts received during the wedding.

4) Risk Management

Following marriage, it is important to reassess one’s insurance coverage to secure adequate life insurance that safeguards the spouse and family against the risk of untimely death. If the spouse is employed, it is crucial to protect her earning potential; conversely, if she is a homemaker, appropriate coverage should be established to provide financial stability in the event of the primary earner’s absence.

5. Emergency Fund

Establishing an emergency fund is advisable to cover regular expenses during urgent situations. You may consider investing an amount equivalent to three months’ expenses in a short-term debt mutual fund, which can be accessed quickly and typically offers better post-tax returns compared to a traditional bank fixed deposit.

6. Prioritizing Short-Term Goals

Compile a list of desired purchases. Effective financial management hinges on acquiring only the most urgent items and deferring the purchase of others, even if funds are readily available. Stagger the target dates for these deferred purchases over a six-month timeframe. By streamlining your shopping list, you may be pleasantly surprised by how well you manage without many of the items you initially considered essential.

7. Establish Your Medium and Long-Term Aspirations

It is essential to articulate your long-term objectives in financial terms, whether it involves purchasing your ideal home or securing the finest education for your children. Following this, you should ascertain the amount required to be invested regularly or as a lump sum to accumulate the necessary capital to achieve these significant life milestones. Engaging a professional financial planner may be beneficial for this process.

8. Draft a Will

Many newlyweds do not prioritize the creation of a will or the assignment of power of attorney. However, it is crucial to act responsibly and safeguard yourselves by contemplating unforeseen circumstances, such as the sudden passing of one partner or the inability to make medical decisions. In the event that both partners pass away, it is important to clearly outline the desired distribution of your shared property and assets. A will serves as a formal declaration of your wishes in your absence.

9. Obtain Insurance

As individuals transition into marriage, it becomes necessary to secure adequate life insurance coverage to protect their spouse and family from the financial repercussions of the breadwinner’s untimely death. Additionally, obtaining critical illness insurance is advisable to safeguard against potential incidents that may hinder one’s ability to work temporarily.

10. Plan for Future Accumulation

Execute your financial strategy by identifying various investment vehicles that can assist you in reaching your objectives. Systematic investment plans in equity mutual funds are often recommended for this purpose. The final choice of investment instruments should align with your personal profile, risk tolerance, and investment knowledge. It is also important to consider immediate financial needs and annual expenses, such as insurance premiums, which may affect your cash flow.

It is recommended to engage in discussions regarding financial matters with your spouse to ensure that both parties are informed about the investments being made. It is essential for both the husband and wife to develop a financial plan that is acceptable to both.