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Monday, July 23, 2018

Simple financial tips for the newly married

The main advantage of buying a life insurance policy is that it not only covers the policyholder for his/her lifetime but also pays out the sum assured along with bonuses to the family.

Updated: December 25, 2017 6:03:36 am
HDFC Life’s Click2Protect 3D Plus cover

You just got married and you’re looking forward to a dream life together. Buying a beautiful home, a swanky car or going for a luxury holiday will probably top the list of things you both envision. But where will the money come from? Any financial woes you may be battling won’t change after marriage. So while broaching the issue of finances may seem unromantic, it is something that needs to be done.

Here are some tips that will help you deal with potential financial issues better:

Be transparent about your financial history: Some people exaggerate their financial status to impress the in-laws or their fiancée. However, keeping your spouse in the dark post marriage will only be tantamount to financial infidelity. Plus, it will not be a smart utilization of your joint resources. Why would you both, for instance, park your funds in similar return/risk investments that don’t maximise your safety net?

Set financial goals: Before you got married, you probably had no liability and were free to spend your money however you desired. But now, both of you are going to depend on each other, and are going to start a family soon. So you need to list your individual goals and decide what each of you want and at what stage of life.

Turn your dreams into reality: Having set your financial goals, both of you now need to formulate a plan on how to achieve those goals together. This can be done by preparing a blueprint for your current and future (expected) income and expenses, as well as how much both of you would be able to save towards meeting those goals. You can also seek the help of a financial planner. But, before you do, you need to first build a big enough protection cover.

Get Insured: As a couple, it is crucial for each one—whether one or both are working—to have a life insurance cover. This is to ensure that if anything happens to either one of you, the other doesn’t bear any financial burden (loans, debts, etc) that may now fall upon him/her, and is able to maintain financial stability.

The main advantage of buying a life insurance policy is that it not only covers the policyholder for his/her lifetime but also pays out the sum assured along with bonuses to the family. And, it bodes well to buy life insurance as early as possible because the longer you wait to purchase life insurance, the more expensive it gets. Also, if either of you develops a medical condition later on, you are likely to pay higher premiums. So buy insurance policies soon after you get married and make the purchase online as the policies online are significantly cheaper. You also need to review your life cover from time to time or at different life stages, like when you have a child or if you have bought a house, etc. This is because your financial liability increases with these events. Usually, a life cover of about 10 to 15 times of one’s annual income is considered ideal; depending on one’s age and requirement.

Try HDFC Life’s Click2Protect 3D Plus cover that also offers additional riders that you can add based on individual needs. Where to invest: Once you have provided your spouse with a safety net through a life insurance policy, it is time to mull over where to invest your hard-earned money. For this, explore a combination of saving and investment avenues such as PPF, mutual funds, bonds and insurance products like ULIPs.

Since ULIPs have a lock-in period of five years minimum, it is a good option if you’re looking to save for retirement or making a big purchase like buying a house. Also, to gain from the power of compounding, you need to start investing as early as possible. This will help you accumulate a large corpus over the long term with the minimum amount of investment.

So follow this advice and don’t ever let money pose issues in your relationship; take time to figure out your financial situation to maintain financial stability and build your savings & investments as a team.

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