Financial freefall: Mistakes newly-weds should avoid !!

As many a cynic would have you believe, marriage is a zero sum game. You gain some, you lose some. If, however, you’ve been pinned by the crafty glare of Cupid , scuppering your logic, marriage would seem a profitable equation, promising zestful returns. Now take a moment and expunge the extremities; chart the middle course, where realism rules. Marriage is what you make of it. Get your math right and it doubles your dividends, fudge it and you halve them. So with the finances in a marriage.

One of the most critical changes you encounter after tying the unwieldy knot is the financial reality. Single income can convert to double, but so can the debts; buying assets may become easier, but insurance liability could increase; your spending or saving habits could be a disastrous mismatch, but your long-term goals may be the same. In fact, numerous studies have claimed money to be the primary reason for all marital discords. While it’s not easy to find a snug financial match, it’s not impossible to home in on feasible solutions either. These can work for or against you depending on how you deal with them. You not only need to harmonise the different financial ideologies and habits that you bring into a new relationship, but also streamline your individual finances in a way that you can work towards the combined goals.


To help you find a firm foothold in the new financial paradigm, we present a primer that will not only help avert any faux pas but also provide ready resolutions to fiscal irritants that can unravel a stable marriage.

Reveal your cards

Talk. Discuss. Debate. Confer. Communicate. There aren’t enough synonyms in the thesaurus to emphasise the importance of talking about your finances. Preferably even before you get married. So be it your income or expenses, savings or debts, liabilities or assets, proclivities or aversions, habits or cravings, lay them all on the table. List out your outstanding debts like car loans or credit card bills and assets like jewellery, real estate or stock investments. “Talk about your attitude towards money, your values, what you plan to do with it after marriage,” says Kartik Verma, co-founder of iTrust Financial Services.

These inputs will act as building blocks for your new financial equation and make it easier to formulate goals and stick to a plan to achieve these. Mumabi-based Raj and Rahmat Tapal, both 32, know about the importance of talking. They’ve been married for only a month, but have known each other for several years and have discussed their finances in detail. “We talked about our savings and spending and knew that we wanted a house. So we started saving Rs 50,000 each every month to be able to buy it. After marriage, we have increased the inputs to around Rs 1 lakh per month,” says Raj.

Another fragile decision that needs to be made at the start is how to build assets and settle debts. If you build assets jointly, keep in mind that there can be legal problems in case of a split. As for debts, you could do it by pooling in resources and trying to pay off the one with the highest interest, or continue to do it as you were before marriage. “I am paying my EMIs on the car loan, while Divya pays the house rent from her salary as the house has been leased by her company,” says Amandeep. What’s important is that the decision is made by both so that they are comfortable about managing their finances.

Talking not only helps meet your goals, but also irons out misunderstandings and differences. Besides, it keeps both the partners in the loop and in the absence of one spouse, the other is not left in the lurch.

Frame a budget, fix the goals

If, after the revelations and discussions, you have not already set your goals, it would be the next logical step. Frame your short- and long-term goals in accordance with your priorities and earning capacities. So whether you plan to buy furniture, car or a house, establish a time frame. You should also discuss the financial implications of having a child, savings required for his/her education and marriage, vacations and, of course, your retirement. It’s never too early to start planning and saving for such goals because the compounding effect of investments works in your favour.

To ensure the fulfilment of these objectives, it is critical that you make a budget. Start with bigger expenses like loan EMIs, house rent or insurance premiums and go on to smaller ones such as utility, grocery or credit card bills. Then move to discretionary expenses like those on clothes, cosmetics or outings. “A budget, which includes tracking your spending, is the only way to really know where your money is going,” says Kshitij Gupta, a Mumbai-based financial planner. So you could resort to remedial measures like cutting down on dinners or vacations. “We were both spendthrifts,” admits Bangalore-based Amandeep Singh Chawla, 29, who has been married to Divya, 27, for nearly a year. “But once we framed our goals and budget, we realised than an ‘x’ amount of money had to go towards savings. So we cut down our spending,” he adds.

Work out the plan dynamics

This is perhaps the most critical aspect of financial management for newly-weds. The plan is ready. The execution should be easy, right? Wrong. This is a pitfall that brings on most of marital confrontations. Should you merge your finances? Should the debts of both spouses be settled jointly? Who will ensure the budget is on track? “There is no blueprint for the way a couple should handle finances,” says Gupta. “Merging finances is one of the first big decision married couples make—and often the most difficult. For some, it feels natural to merge all assets. They feel that they are taking the marriage seriously. For others, giving up their financial identity makes them nervous,” he adds.

A simple solution is to have both. While you can retain your individual accounts for paying your credit card bills and other personal expenses, you can have a joint account for household payments, including utility or grocery bills. The latter allows flexibility to operate it in each other’s absence. “You could also decide contributions towards different household baskets, depending on the income ratio, and make allocations from separate accounts. This will give room to both for indulging in discrenationary spending and maintaining independence,” says Surya Bhatia, a Delhi-based financial Planner.