Your marriage is probably the first most important life event for which you may start saving. It marks a new beginning for a lot of things; new spending habits and new savings targets.
Here are five financial tips if you are newly married.
- Discuss your finances
It is imperative that you share all the financial commitments and mutually prioritize them. You must gain a clear understanding of your total income, expenses, and liabilities. Here is how to achieve this.
- Get a comprehensive and clear picture of the current and future total income
- Work on clearing the loans, if any, at the earliest
- Enlist, accommodate, and accordingly update financial goals
- Re-plan life events accordingly, if required
- Make the necessary changes to your spending and savings habits
- Prepare a budget
Based on the aforementioned, the next step is to prepare a budget. It must consider your family income and expenses. This will allow you to determine the amount you have available towards savings. A budget will also help you prioritize different financial goals and save accordingly to meet these.
- Start investing
Investing early is beneficial because of the power of compounding. It allows you to earn income on the returns on your investments and build wealth. With the help of the right investment tools, you will be able to achieve your financial goals sooner and with lesser effort. This exercise will help you see a clearer picture of what you need to save to be able to achieve your financially stable future.
Like the saying goes, “Do not put all your eggs in the same basket”, you should diversify your investment portfolio. One way of doing the same is by using a different type of investment instrument for every financial goal.
Since you are recently married and young, your risk appetite would be higher and you may invest in stocks. Equity investing delivers higher returns in the long-term and is appropriate to meet financial goals in the distant future.
You may not be willing to assume higher risks of stock investing. Furthermore, you may want to hedge your risk while still taking advantage of higher returns. The ideal tool for this is to invest in mutual funds. With mutual funds, your investment risks are fairly lower as compared to those in the stock market and your returns are higher than fixed income securities.
You may develop saving discipline with a systematic investment plan. In a SIP, you can make regular small investments in a fund of your choice. When you invest in SIP, you are able to earn higher returns when compared to debt instruments, that too without assuming the greater stock investing risks.
- Build a contingency fund
Life is uncertain and building a contingency fund for emergencies is very important. This money must be deposited in a separate account and must be used only to meet emergencies like an illness or loss of employment.
Financial planning is incomplete without insurance coverage. It is important to avail of life and health coverage to protect you against any uncertainty.
Marriage is a new beginning and working with your spouse to achieve financial security and peace of mind is of utmost importance.