Handling finances for & after wedding

Before they marry,couples need to discuss how they will share their joint wealth

UMA SHASHIKANT


It is the season of weddings,and as I attended my share of the events,several questions crossed my mind.It is tough for families to view everything from a monetary angle.I risk being told off that there are things that money cannot buy.However,all of us know the power of money and how poor financial decisions can hurt us.Perhaps,it would simplify things and help us deal with these questions if we have a money framework that we can follow.
First,I am amazed at the amount of money that is spent on weddings even by the simplest of families.The grandest weddings are still conducted by those who seek a good excuse to spend the black money they have hoarded and earn some social brownie points.The money spent on weddings is easily a multiple of the savings of the family.
A goal or an expense that cannot be met comfortably by the current regular salary needs a well-thought out saving and investment plan.However,several families scoff at including weddings in their financial plans.The confidence about future incomes makes youngsters big spenders.However,middle-aged parents,who are spending a large sum,may be compromising another goalretirement or the education of another child.This is why the funding of a wedding needs to be a project that a family should plan seriously well in advance.
Second,several newly-weds end up being a part of the extended families.It is not uncommon for children to stay with parents after marriage along with their spouses.I see doting parents living with their children and raising their grandchildren,thus enabling the younger generation to pursue paying careers.But what about the finances Who manages the household expenses Who bears the EMIs and loans Is there a common spending pool Is there a fair contribution to it
A household with multiple incomes and common expenses needs a working plan to run smoothly.A plan to take care of the macro items without getting into the nitty-gritty.For example,if there are advantages of living with parents,do the younger members invest the savings in rent,housekeeping and childcare for the future benefit of the parents I find that most households begin with trust,goodness,generosity and kindness,but the lack of a sensible spending and sharing plan results in acrimony,leading to a deterioration of relationships.
Third,weddings are expensive,from the functions and trousseau to the honeymoon.Later,to please a new spouse,there may be more expenses on travel,gifts,eating out,and the like.Reduced saving ratios,higher credit card expenses,and occasional hand loans from friends are all par for the course.However,without pre-planned savings,or a plan for repayment,unbridled enjoyment can result in financial stress and a high-cost debt.Many people are unwilling to discuss finances or the affordability of an expense with the new spouse.Most are likely to spend with a sense of joy and entitlement.It is important to make a mental map of where this will go in the long run.Cash-flow maps for spending and repayment need to be maintained,budgets should be made even if these are not disclosed,and care should be taken to ensure that all fun is not about spending money.Including low-cost fun activities and setting the tone for affordability,sooner than later,is important.Debt traps are not good to deal with in the early days of marriage.
Fourth,young couples tend to set benchmarks for their standard of living based on their peer group.To have their own car,home and a lavish lifestyle is too enticing to be ignored.There is a need to prioritise and sequence the goals to avoid stress.Buying a car and home,and bringing in a huge EMI because of an employed new spouse,can turn into a risky proposition,especially if the spouse would like a career break to raise children or if one of the spouses job faces a risk.Having too many loans and EMIs,and clubbing multiple financial goals can stress finances seriously.It may be a good idea to see what portion of the joint income can be devoted to these possessions and how it would be funded and managed.
Fifth,young couples find it tough to discuss your money and my money.Many are still not comfortable with prenuptial agreements.Money is personal to each person who earns it,and attitudes to money can be very different.I know of a household,where the husband saved his income,while the wife used hers to run the household.The couple sadly broke up,and the wife was left with no assets.Each spouse needs his or her corpus to fall back on.How,how much,when and where are the decisions that need to be taken.
Sixth,everyone needs a finance buddy.Many of us are unwilling to discuss money issues with parents,spouses or siblings.We dont want them to know we have enough,or that we are running short.We all need a friend who knows what our money attitudes are,and helps steer us when we are in trouble.Someone with whom we can discuss alternatives without worrying about being judged.It can be an outsider,adviser,tax consultant or an uncle.Many of us clam up when faced with a crisis and having a friend helps in resolving money issues.
There is a lot that changes in our money lives when we decide to get married.It may be worthwhile spending time to think about our money attitudes,capabilities,wealth and willingness to spend before we end up quarrelling about it.