Hey! Are you planning for the wedding? Have you planned your finance for the marriage ceremony? Do you have any premarital debt? Does your future partner have any premarital debt? Have you shared your debt information with your future partner? Do you think hiding your debt before marriage is good? Are you afraid to share about your debt with your future partner? Is it good to marry before paying off your debt?
If you are not comfortable to answer any of these questions then trust me, this article is going to be very helpful for you. Apart from that, this article is also helpful for those who are interested in developing their financial intelligence. Financial intelligence has several pillars, and one of them is managing your finance smartly. A wedding can be used as a case study for a financial situation of life.
Marriage brings happiness and liabilities simultaneously. Premarital financial planning is necessary for happy married life. In this article, I am going to reveal some smart ways to plan your finance before marriage.
1.Build an asset which can meet your wedding ceremony expenses.
I would like to ask a question which usually comes to anyone’s mind before marriage. What is the right time to marry? Can you guess the answer of this question? Should the answer be a particular age? Or after getting a job? Neither there is a fixed age to marry nor is it recommended to marry only after getting a certain job. The hint is in my previous article. I had explained marriage is a liability, and you should buy the liability only when you afford it. Do you understand ‘to afford something’? What does it mean? In financial terms, affording any liability means, there is some source of income to meet the expense of buying and carrying the liability. Like when you rent a house; you must have some income to bear the rent of the house. Then only you can afford the house. Similarly, you can afford marriage only if you have generated some source of income to carry the expense of the marriage. Please don’t get me wrong here. I am not trying to compare renting a house and a marriage. Both are just the entirely different things and both have different importance in life. I have just used the example of the house for easier understanding. Do you know, what this source of income is called, which carries the expense of your liability? It is your asset. So indirectly you are not buying any liability; it is your asset which is buying liability for you to make your life comfortable and happy.
2. Pay off your premarital debt before the wedding.
Hey! Again I have a question. Is it good to marry with premarital debt? I do not recommend marriage with premarital debt. Marriage adds a new chapter in anyone’s life. Then, why not start a fresh chapter with a happy and motivated mindset instead of carrying the mental stress of premarital debt. As I had already explained in my previous article, marriage is a kind of liability, so adding one more liability in debt condition doesn’t sound as a smart idea as per my suggestion. I will explain some easy ways to pay off your debt in my next article. I have explained in my previous article, how household debt is growing rapidly especially in developed countries.
3. Premarital discussion on finance will help to reduce the gap between financial personalities of the couples.
Many times people choose to marry before paying off their premarital debt due to commitment with their partner or their families. I understand. Then, are you afraid to share about your debt with your partner before marriage? Trust me; there is nothing to be afraid about. Knowing each other’s debts before marriage will build an ultimate trust and bonding between the couple. It will also help to reduce the gap between financial personalities of the couple. The financial expert, PV Subramanyam, CEO of subramonoery.com agrees that not having premarital discussion on finance can easily lead to divorce due to difference in financial personalities of the couples. Premarital finance discussion will help the couple to pre-plan, and how are they going to pay off their debt. It is recommended to pay your debt together.
4. Spending smartly can help you to cut your painless expense.
Hey! A good planning can help you reduce your expense without hampering your dream. Usually, a marriage consists of different ceremonies with different rituals and expenses. Prepare a budget sheet for each ceremony. Each budget sheet will consist of different sections of expenses like clothes, food, decoration, marriage hall, travel, etc. Prioritize each section as per importance of rituals and what really matters to you and your partner. After all it is your wedding. This budget sheet will help you to cut the unnecessary expenses without any pain and utilize those saving in what really is close to your heart. This budget sheet will also help you to identify the common things utilized in several ceremonies. If you can buy them collectively, it may cost you less. Hey! There is a secret of investment – Smart investment will buy you more things with less money. Also early booking of many services like marriage hall, hotels and travel tickets can also save you a lot, as cost of most of these services goes high during marriage season.
5. Make your wedding unique.
There is a human tendency of comparison. Comparison can enhance your budget without making you feel something special. It is not a smart idea to spend recklessly for show off. This may give you pleasure for a little time, as others may praise about your wedding ceremony during the event. But this pleasure is going to wear off soon after the wedding. However, if you have spent on something which really made you and your partner feel special and unique, the pleasure will live forever with both of you together. Hey! There is one more secret of investment- Invest in what gives you long term returns instead in what gives you short term returns.
6. Getting insurance is a good option
Since wedding is a huge investment and it involves your parents and your hard earned money saving from long time of your carrier, getting insurance is a good option. Cancellation of marriage date in last moment may cause huge damage to both parties. Some insurance companies provide marriage insurance. Such insurance cover financial losses due to cancellation of marriage due to some specific reasons like natural calamities, fire loss, theft or due to demise of some relative in blood relation within a week of marriage date or due to accident or death of the bride/groom. However, it doesn’t entertain any claim of marriage cancellation due to dispute between the two parties.
7. Plan your investments
I had explained in my previous article that expense doesn’t end just after marriage, but it goes a long way like holidays, kids, their education, buying homes, etc. Although you have the rest of your life after marriage for planning your investment, but it is a wise option to start thinking of investment before marriage and start putting aside a part of your income into investment instruments. You can plan your investment as per the period of expense. For example, planning for holidays could be a short-term goal so you can achieve it through liquidity. Having a kid may be a medium-term goal, so you need cash and medical insurance to get through it. Buying a home and planning your kid’s college education are long-term goals and you can build these corpuses with equity-linked instruments. Apart from these, you also have to consider your tax liabilities. However, I will discuss about taxes in some other article.
8. Managing bank accounts
It is completely a personal choice whether a couple wants to continue with their individual saving accounts or get a joint account. However, there are many benefits of having a joint account. The money in the account is easily accessible to both the partners. Hence, it is easy for any of them to withdraw money, make payments and track their financial activities.
On converting existing individual accounts into a joint account, Tushar Goyal, Business development and Communication, Meri Punji IMF Pvt. Ltd. said, “Assuming both partners are tax payers and they get their earnings in respective bank accounts, it is suggested that they should open a new joint account instead of converting existing accounts. They should, however, make each other nominees of their bank accounts. In case both partners are not taxpayers, then converting a single bank account into a joint account is advisable.”
9. Being prepared for emergency
Since marriage is a huge ceremony, various unexpected expenditures usually come at any point of time during the wedding or post wedding. It is advisable to pre-plan a separate saving for these situations.
Please provide your feedback about the article in the below comment box. I would love to know which of the above-mentioned points you feel are most important. I am eager to hear your suggestions on how to manage the finance smartly before marriage.
Hey! I have discussed about reasons for falling in debt trap in my previous articles: Greatest debt is not to lose a job but to compromise with a job which you are not passionate about, and Marriage without mental and financial planning is like committing suicide. In my next article I am eager to share some easy ways to pay off your debt. Stay tuned with Raj’s Finance.