Financial steps that make sense before marriage
Marriage can usher in a lot of new changes in one’s life. The most important implications are financial. For instance, when you are single, you can be put up in a paying guest or a low-cost bachelor’s pad, but marriage means taking up a new house on rent which means extra cost. Therefore, it is of utmost importance to be prepared for a bunch of unforeseen expenses that may crop up after marriage. Plus, the saving mentality of both the partners may not be similar, which can cause some friction in the initial period. Here are a few steps that can make your life easier:
Assess your financial situation: Assessment of your financial condition is very important before you take the big step. Are you financially stable enough to run a household? Is your partner working or a non-working individual? If non-working, can you afford to take his or her entire responsibility on your shoulders? Ask these questions before you take the plunge.
Be transparent: It always makes sense to be transparent with your would-be spouse before you tie the knot. Discuss with each other about each other’s earnings, existing liabilities including home or personal loans, credit card bills etc. No expense should be a shocker for either of the partners in the post marriage period.
Do the math: Sit together and chalk out a plan of the expenses that you both will need to bear after marriage. This will include everything, right from rent to grocery bills, to phone and electricity bills, laundry bills, home or personal loan EMIs, commitments towards family or parents or alimony towards ex-spouses or school and maintenance fee of children from first marriage. Don’t leave out anything. Only once you feel you are covered in all these aspects should you move ahead with the decision of marriage.
Bank accounts: As individuals, you might have your individual savings bank accounts but post marriage it always makes sense to have a joint account, which both of you can operate. Institutions such as IDFC bank offer hassle-free opening of joint accounts with minimum documentation. In joint bank accounts, the money is accessible to both partners so it becomes easy for either partner to withdraw money whenever needed to make payments and track their financial activities.
In case of your savings bank accounts, too, it makes sense to make each other nominees of the bank accounts.
Get rid of debt: Before you take the plunge, it is a good idea to get rid of pre-existing debt that’s within your limits of affordability. Of course, it is not possible to pay off a 20-year home loan at one go. But suppose you have a mammoth credit card bill. Why give such high interest on the credit card? Instead get a personal loan at a much lower interest and pay off your entire credit card bill. Lenders such as IDFC bank give easy personal loans at competitive rates of interest which makes it even easier to repay them. A personal loan can also be used to consolidate your existing credit card and other debt. A personal loan EMI will allow you to pay for everything at one place, without going through the hassle of making payments at multiple places.
Be prepared for unforeseen expenses: As discussed above, marriage brings forth a whole new life. So, it is not uncommon to come across an unforeseen expense post marriage either. A careful assessment and handling of the situation is required at all such times. Both the partners should be ready to handle the situation. It can range from an impulse buy of a large LED TV to a sudden vacation, hospitalization or even an unplanned pregnancy. You must at all times be prepared to face life as is. And for that, sound financial planning is of utmost importance. Apart from maintaining an emergency fund in your bank accounts, you must also opt for term insurance and health insurance. If there are dependent parents, the insurance should cover them as far as feasible.
Get a wedding loan: If you are short of cash, you can always opt for a wedding loan to finance your wedding. Wedding loan is a kind of a personal loan that allows you to fund your dream wedding. No questions are asked about how you spent the money – you can use it for buying designer wear, buying gifts for guests or funding your honeymoon. Lenders such as IDFC Bank have simple methods of applying for wedding loans, and the money is deposited into your bank account in as less as two days. A wedding loan is much better than swiping your credit card to pay for expenses. The annual interest on a credit card can range anywhere between 30-42%; use it only as your last option.