As newlyweds, it’s possible that sharing every aspect of your life with your spouse may take some time, especially when it is something as important as your finances. Instead of hesitating to talk to your partner or neglecting the discussion, adopt an approach that’s governed by absolute honesty.
Here is how to lay a solid foundation for your future by discussing financial matters with your spouse and tackling these five tasks.
Decide How You Will Share Responsibilities
First of all, decide if you want to share all responsibilities equally or each take care of certain costs. Based on the option decided, you can both take care of the important expenses in a predetermined ratio. There’s no one-size-fits-all approach, so take your time to decide what works for the two of you. This doesn’t just apply to who will pay the bills each month, but also to your budget and investments.
Set Goals And Prioritise Them
The next step would be to discuss your individual dreams and ambitions. Not being aware of the what’s on your spouse’s mind may lead to unpleasant surprises later on. So, detail your individual and combined goals and come up with a plan of action together. While you may want to invest in a home as a couple, you may also want to take a solo trip with your friends or cousins each year. Discuss how you will tackle such expenses—would you draw from a joint account or spend on your own?
Start Building An Emergency Fund
Investing in an emergency fund should be a top priority. Now that you’re responsible for another person, you must have a plain of action for emergencies like receiving a pink slip, accidents, severe health conditions, etc. So, start an emergency fund and invest in it until you accumulate enough to cover a year’s expenses. This will give you a safety net so that you don’t have to compromise on necessities even in the worst-case scenario.
Draw Up An Investment Plan
Based on your goals and plans for the future, look into investments. Start by quantifying your financial goals and then choose investments accordingly. Also remember that as newlyweds you still have limited responsibilities and so, your risk appetite is higher. Keeping this in mind decide how much you want to invest in high- and low-risk instruments. Typically, for long-term goals such as retirement, invest in equity and mutual funds to earn substantial, inflation-adjusted returns. For medium-term goals like saving for the down payment of a home, you can invest in a mix of debt and equity. For goals that have the shortest timeline, consider safe instruments to protect your corpus. While you’re on the subject, also discuss what you wish to do with windfall gains like bonuses, commissions, and monetary gifts from friends and family.
Upgrade Insurance Coverage
As your responsibilities change, so should your insurance coverage. If you don’t have insurance already, buy life and health insurance as soon as possible. If you already have a policy, check if it’s offering enough coverage to account for your spouse as well. While life insurance will step in in case of loss of income, health insurance will help you deal with the high healthcare inflation. Likewise, if and when you have children, reevaluate your insurance requirements and make changes to your policies accordingly.
With these five areas taken care of, you can breathe easy as you have nothing to worry about on the financial front.
The writer is CEO, BankBazaar.com