It’s Valentine’s Day.
Having the right financial chemistry is as important as the personal chemistry between couples which can lead to a long-lasting relationship. When both partners are financially independent, it is vital to consider common financial goals in your financial planning strategy.
Other than having the sensitive money talk that establishes a good understanding between partners, a financial guide for couples can also always help kickstart the process.
Your financial guide for couples covers all the key financial planning stages.
1. Be Prudent in your Money Management
Having two earning members in one family can lead to unplanned and reckless spending. Always be cognizant that increasing your family by a single member also leads to a rise in household spending. If you plan to start a family soon, you need to manage your money smartly, as a baby will significantly add to your monthly budget.
You may choose to curb your investments to pay for these expenses. However, that’s not a smart way to go about it, as it will impact your long-term savings and financial future. In our financial guide for couples, we suggest cutting down on personal expenses, such as luxury items that you can do without for the time being.
When you start the financial planning process, it will involve a ton of decision-making. You must take baby steps but remain committed to the plan.
2. Build Your Emergency Corpus
Any smart couple will always contribute funds from their income towards an emergency corpus that can be liquidated quickly. Ideally, you should have anywhere between 6 months to a year’s expenses in your emergency corpus.
As per our financial guide for couples, it is best to start planning on building a stronger emergency corpus well in advance. This is because you may encounter unforeseen expenditures you probably did not anticipate when you were single.
This also makes sense because your monthly expenditures will have increased. Therefore, the total emergency fund amount automatically goes up by calculating a year’s expenses.
Moreover, your financial planning should account for an even bigger emergency corpus if you decide to take a sabbatical after getting married.
3. Start Investing in New Goals
Converting your single status to that of a couple in a relationship can change the overall focus of your financial goals. Priorities change, and you need to set new life goals that will cater to your family’s needs in the future.
Our financial guide for couples recommends charting out every stage of your life as a couple and aligning the financial goals along the route. For example, you would want to ensure that you have enough funds for a downpayment on your first home in 3 years’ time post getting married. Generally, the downpayment to a home in a metropolitan city can be quite high. This means you need access to the funds at that very stage of your life and hence have a financial goal that matures at a specific time.
To ensure that you can meet these key financial life goals, investing in various short and long-term investment policies or SIPs would be the smart thing to do as a couple. As you go ahead with your investment, consider a 10% inflation which should cover you against higher costs in the future.
4. Boost Your Term Life Cover
Term life cover is a form of insurance that many couples opt for today. This offers insurance for your loved ones at an affordable cost in your absence.
You may have already purchased a term life cover before you entered a relationship with your partner. However, since it was done when you were single, it will be only enough to take care of the obligations and liabilities in your pre-couple stage.
As a couple, the expenses increase, so you must consider topping up your term life cover to take care of the entire family’s financial needs when you are not there.
In our financial guide for couples, we suggest that you simply calculate the difference between your current coverage and what you need to have. You can fill in the gap by purchasing a second plan.
5. Plan Out Your Estate:
Even if you have just started out with your financial planning journey and think there is really no estate to plan for as a couple, you could not be more wrong. Any asset of significant value that you and your partner own, including a home, car, jewelry, current and savings bank accounts, fixed deposits, and investments, is part of your estate.
As per our financial guide for couples, we encourage them to include estate planning as a part of their overall financial planning process right from the moment they start accumulating these assets. All you need to do is to list out the beneficiaries that will help identify the owners in the event of your untimely demise.
Bottom Line
Starting your journey as a couple in any relationship requires effort, patience, and money. With our financial guide for couples, you can ensure that your financial future is secure. That’s the best gift that any partner can give on Valentine’s Day.
FAQs
What is the best way for couples to start saving?
A systematic approach to savings is the way to save for couples. Save 10% of your monthly earnings and let it accrue interest over time.
How often should you track your financial plan?
Ideally, you should track and monitor your financial plan and goals as a couple every year.
What should you do if you have a lot of debt?
Smartly managing existing debt is an important part of financial planning as a couple otherwise, there will not be any savings left when the month ends.
Read more: How Long-term investing helps create life-changing wealth – TOI.