17-May-2016 written by : FSI-Team
When a bond is formed between a man and wife, you choose to stay together for better or worse. When life is going good, it is difficult to imagine that it can get worse. All too often we are swept into this new phase of our lives with rose-tinted glasses, quite unaware that living involves a price at each step that only compounds with advancing years. Lack of calculation turns into miscalculation and snowballs into mismanaged finances, leaving us either financially stretched or debt-ridden and stressed. It can be avoided with some smart financial planning.
Marriage is the meeting point of 2 bachelor worlds. When you are single and earning, your cares are only limited to yourselves – the next movie, the next sale, the next credit card purchase or the next vacation. When you start a family, you are entering into an agreement to be responsible for the other’s emotional as well as financial security. You have to start thinking of a common ground that suits both your financial needs. A good place to start is to open a joint account in which you transfer a part or parts of your salary (if both are earning). It is advisable to pay out your essential household expenses, like utility bills, grocery bills and rent from this source. What this forces you to do is keep a tab on your expenses and lets you figure out how much of income you can keep aside for other incidental expenses, like holidays or crucial expenses like investments and insurance policies.
A joint account makes it easier when you are co-applying for a home loan in the latter part of your life.
If you’ve done some research on the Internet or even listened to investment advice, you will have got a sense of how you need to start planning for each need, each emergency from as early as possible. When you start early, you get a head start on better investment premium or life insurance rates and your savings as well.
An equally important financial decision is to build a roadmap of your short, medium and long term financial needs. It is important to identify which is a “need” and prioritize that over the “good to have”. For example, if you are thinking of a short-term financial goal, unless you are already drawing a handsome salary, your goal would be to save for the first few years, buy a medical and life insurance plan and maintain credit cards with a healthy drawing and repayment habit. It is important that you build up your credit worthiness over a sustained period of time, so that you are not surprised by your CIBIL rating when you approach a bank for your medium or long-term goal of buying a house. Often, poor debt honoring habits play havoc with the credit score. To undo or control the damage, you would then need the services of credit repair agencies to understand how to improve CIBIL ratings.
Sooner or later, you will be welcoming newer member(s) in the family. To secure his/her health and future, you will need to set aside savings accounts or make investment plans that provide for the child’s initial medical expenses, education and marriage. With increasing education costs, starting that fund early will work in your child’s favour and give you peace of mind. If you have an option, encourage close relatives to turn their gifts into cash, which you can deposit towards the expenses of your child.
If you are working for a company that provides medical insurance policy benefits, take advantage of it by topping it up to the maximum coverage possible. There will perhaps be restrictions on the number of dependents that you can add to the insurance plan; however, since your company is probably paying 50% or more of the coverage, it makes good sense to seek maximum coverage and pay something out of your salary to make up for the extra coverage.
On the other hand, it is also wise not to depend solely on the company provided medical insurance coverage. If it is not good enough, or the next company you move to does not provide par benefits, you might want to safeguard yourself in such a situation. So, check out medical insurance plans online and weigh in factors such as co-pay, waiting period for pre-existing disease, lifelong coverage, room rent for hospitalization, extra coverage for critical illness, and your budget before you select one that works for you and your dependents.
The importance of starting a life insurance policy cannot be stated enough. With the Internet opening its gate to convenient and reliable information, it should be relatively easy to choose a life insurance plan that works for you and your family. After your ground research, seek the advice of a trusted source to get onboard a policy that works for you.
Another necessity that you need to give priority to is saving for your retirement. Pension schemes from companies are not enough to sustain you when you retire. Invest a decent part of your salary in pension and annuity schemes that best suit your unique needs.