As Indians,we inherently love festivities,and celebrating weddings form a significant part of our social lives. Shopping,organising,decorating,post-wedding planning usually take up all the time. In the midst of this excitement,we usually never take a breather to sit down and plan our finances. However,as credit bureaus,we often notice that this could prove to be damaging to the couples financial health if not appropriately accounted for.
A new beginning
Marriage is one of the most hectic yet most enjoyable times in our lives. However,the big fat Indian wedding also brings with it a set of expenses and financial complexities. Sometimes,couples need to opt for credit or apply for loans to effectively manage the costs. Thus,it is very important for the couple to sit together and plan their finances.
Discuss your finances now to avoid financial and marital stress later.
Ashish and Neha met in college and were together for ten years before they finally took the inevitable step to tie the knot. Both families were ecstatic about the union and planned a grand wedding. Ashish also decided to buy his own house. They both earned well and knew that they would be able to shoulder the additional financial burden.
Like most couples,Neha and Ashish werent comfortable talking about personal finances. However,Neha knew that it was important to have this discussion as most couples fall out over this. She decided to take the initiative and discuss income,spending habits,debts and savings with Ashish,even though they both had very different attitudes to money. Not only did they talk of how the day-to-day household finances would work,but also discussed eventualities.
It was not a comfortable talk. There were moments when they felt awkward and pessimistic talking about death and separation. However,they both knew that this would further strengthen their bond and solidify their relationship.
Post the discussion,they decided to apply for a home loan together and take a personal loan in Nehas name with Ashish signing on as a guarantor. For both loans,the bank needed both their details and documents for application processing. They were made aware that any delays in repayment would affect both their credit histories as recorded by the bank and provided to a Credit Information Company.
What is Credit history?
Banks and NBFCs provide a record of your loan and credit card repayments to CICs. When you apply for a loan,banks have to make sure that you are who you say you are and that you will repay the loan. They will look at the information in your application and will check your credit report.
The credit report contains identity information,past and present credit obligations,previous addresses and enquiries made by banks for all your loan applications. If your report shows that you repay credit on time,this will usually help you get credit at favourable terms. Thus it is important to maintain a good credit history.
Rights and Responsibilities
Neha and Ashish ordered copies of their credit reports and went through them together. They drew up the household budget and split the liabilities of the home loan and personal loan and other household expenses; and decided who would pay for what. Thus,they worked out how much they will have to spare.
Post marriage and after moving residences,Neha and Ashish got their address changed in the records of all their banks,and other public documents like Passports,Voter Id,etc. Neha changed her surname and got that updated too. By doing this,they avoided becoming victims of possible frauds.
Neha and Ashish were also made aware that they were legally responsible for each others loans whether it was a joint loan or one person was a guarantor to the other.
Happily Ever After
Neha and Ashish are happily married for five years now and manage their lives and finances well. Learning from their example,here are some key tips for the just married to manage your finances better:
* Have an open discussion regarding your finances.
* Segregate the domestic financial responsibilities clearly with your spouse.
* Use credit reports to understand your current credit situation and ensure all details in it are accurate and regularly updated.
* Plan your finances taking into account all liabilities existing and envisaged.
The author is Managing Director,Experian Credit Information Company of India Private Ltd