Daily operational costs like rent and groceries are divided among couples, leaving them with more money to splurge on their indulgences. Account Debited? buying a flat, planning home renovation and working towards joint financial goals. Rameshs currently do not have any beneficial tax saving investments. Indians Can Invest In East Asian Real Estate Through Kotak MF’s Global Fund, The Mutual Fund Industry – Challenges And Opportunities Ahead, RBI Asks HDFC Bank To Stop Launch Of Digital Activities, India Needs To Attract More Foreign Investment For Revival. You’ll want to share the good, the bad, and the ugly. RTGS To Be Made Available 24X7 In Next Few Days: RBI Governor, RBI Likely To Keep Interest Rates Unchanged, May Revise Growth Projections, States' Indebtedness May Soar 36% To Rs 68 Lakh Cr This Year: Report. Apart from this Sathya has a Mutual fund investment of Rs.2,000/- on a monthly mode. Family planning: Experts say, daily expenses go up by almost 10 to 15 per cent once a couple has children and continue to increase exponentially as the child grows up. Confide in your partner. Financial planning really should be a priority for all couples as soon as they return from their honeymoon. Click to share on Facebook (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on WhatsApp (Opens in new window). Her pre-tax salary of $14,000 leaves her with about $8,500 per month to spend and she banks annual year-end bonuses of $90,000 composed of cash and company stock. Although it works for some couples, if one person is managing all of the house’s money, it can be easy to become resentful of one another over how money is managed or spent. Suggestion for Tax Planning and Financial Planning. The mutual fund though wealth creating does not save tax as it is not an ELSS (Equity Linked Savings Scheme) fund. For example, a travel fund can be created where the partners can pool in a part of their salary to spend specifically on their yearly vacations. Apart from this Ramesh has agricultural income of Rs.72,000/- per year from his ancestral agricultural land in Tanjore. It’s important to understand each other’s money personality and wor… Only through honest conversation and budget analysis can couples track and change their financial behavior—and work to reduce the stress, confusion, and frustration of managing money together. The endowment plan which is the largest investment for the Rameshs is a typical case of asset class mismatch. This way, if planned properly, they can save more, spend more and even have a healthy corpus for retirement and future exigencies. They need to start this immediately as they will face a severe cash crunch from increased expenses, once their baby is on the way. Planning your finances together can help you build a strong In their current income levels, the Rameshs should focus on financial planning rather that saving tax. It is always advisable for couples to talk about their finances and make full and honest disclosures to each other about their expenses and liabilities to avoid any future discord. Put a plan in place to help address potential outcomes down the road. This will entail that they save their entire quantum of Rs.1 lakh under the Section 80C benefit. The current investments of the Rameshs are in their company EPFs to the tune of Rs.17280 and Rs.15840 respectively which works out to 12% of their basic salaries. Nowadays millennial couples often postpone family planning till they achieve more immediate life goals like traveling or fulfilling their hobbies. Subtract this monthly household budget from your monthly income and determine how much you have left … This means that the tax saving: investment required ratio is 1:10 (they need to save/invest 10 times the amount of tax that they plan to save). Their eligible rent to be paid is Rs.9200/- per month together. This is a savings scheme for the long term of 20 years with expected yields of only about 8%. Spouses should disclose their financial responsibilities, outstanding loans, and impending overheads to each other, based on which they can apportion their income and expenses in different buckets and plan accordingly. Nowadays, due to increasing millennial aspirations, disposable income, and lifestyle, it is imperative that both spouses work and get the money home to facilitate a smooth sailing life. Overall Objective – Tax Saving Vs Financial Planning? They need to create a budget tracker and enter details on a regular basis to find where they are spending more. Let's Meet. In such a case, couples should create their goals and invest and apportion for those specific activities. The basic faux pas related to tax planning for Rameshs is the payment of rent from Ramesh’s account only. ATM Didn’t Dispense Cash? To keep your financial future as a couple on track, consider taking (or renewing) these six vows: 1. Working couples have the benefit of combining their total income and then appropriating for expenses, unlike individuals who have to do the same expenses in a single person’s salary. If you’re in an age-gap relationship and need advice in planning for your retirement start-date gap, now is a great time to get started with your unique financial plan. Ramesh (27 years) and Sathya (26 years) are a couple working in Bangalore. While it may sound smooth sailing, a situation where couples are pooling in their finances may often be more complicated than one can expect. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. As you begin your marriage journey, learn to manage your finances and achieve financial goals together with your partner. A couple we’ll call Melissa, 45, and Larry, 63, live in Ontario. Bank loans including personal loans increase by 17% as on April 9, Top 5 Credit Cards To Save On Day-To-Day Expenses | Citi, StanChart and More, 4 Ways To Prep Your Credit Score For A Post-COVID-19 Credit Application, Using Discipline To Formulate A Good Financial Plan, Top News Updates in Personal Finance – Week 2, Stamp Duty And Registration At The Time Of Property Purchase, 3 International Transaction Charges To Watch Out For, 3 Loans That Can Give You Great Tax Benefits, How To Register Banking Complaints Online With RBI’s Banking Ombudsman, How To Save Tax On Long-Term Capital Gains. Rank your financial priorities. The joint cover policy is often cheaper and more convenient since it involves a single premium payment and single payout. The author is the Head of Wealth Management, Tata Capital, You can trust us. Where your individual goals coincide, make a list of the steps it will take to accomplish those goals. Effective financial planning for couples requires 100% honesty. In its most elementary form, financial planning before marriage comes down to communication and making sure each party has at least a little basic education. Since the entire rent of Rs.9000 is being paid by Ramesh only, his HRA component of Rs.48,000/- only can be made use of for tax concessions. The premium for term plans for the required covers will only be Rs.11,000/- for Ramesh and Rs.8,000/- for Sathya. The best part is, it’s fuss-free – we automatically work out … If you know you have a tendency to overspend when you’re stressed–that’s something you’ll want to share with your partner. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. This is not possible at the moment for the couple. A financial advisor can work as a neutral party to help a couple focus on their goals, increase communication, create "next steps," and improve their financial outlook. “After working with hundreds of clients around the country, I started Gen-Y Planning to create a comprehensive financial planning program for the cost of a gym membership,” she says. The mutual fund is not an ELSS. Establishing and following a budget is the most reliable way to eliminate debt and plan for a future together, and it's nearly impossible for couples to set financial goals or build financial strategy … Using the income replacement method at a current bank interest rate of 7.5%, Ramesh will need a cover of Rs.48 lakhs and Sathya requires a life cover of Rs.44 lakhs. Insurance: Working couples have a dual-income hence to save costs; they should invest in joint insurance policies (health and life) that cover both the partners in a single policy. Couples should ensure that they save a considerable part of their joint income to create a provision for family planning and expenses that come with it. Financial Questions to Ask Before Marriage. Please visit. Privacy Policy, All information including news articles and blogs published on this website are strictly for general information purpose only. These single couples face unique money issues, and are less likely to plan for their financial future than married couples. Marriage not only changes their financial situation but also their financial outlook. This way, both the partners, in their respective income statements can obtain the benefits of Section 24 and Section 80C on interest and principal repayments. Your email address will not be published. Working with a financial advisor who is experienced with the needs of LGBTQ+ couples is key, Eichel says, because “a boxed approach to financial planning just doesn’t work for this diverse community.” While references are an excellent place to start, sometimes you … Their salary incomes are Rs.3,60,000/- and Rs.3,30,000/- respectively. She offers investment management and charges less than 1%, … Below are some tips that couples can apply to their routines to plan their combined finances in a more structured manner: Prioritise expenses: The first and foremost step before beginning any kind of financial planning is to prioritise expenses and draw out a roadmap. Hence, couples can gain an added benefit by making the wife the first or primary borrower. “Even in power couples, sometimes one spouse’s assets are illiquid, so it can be helpful to have access to that money.” Healthcare planning. The best time to become involved in your financial plan was from the beginning; the second best time is today. Alternatively, check out NAV Planner to analyse your real-time financial health. Marriage, as they say in India, is not only a bond of two individuals but also their families, cultures, and lifestyles. Keeping financial problems to yourself is destructive to the openness and stability of your relationship. It’s the least complicated way to share the financial burden of day-to-day expenses while maintaining financial independence, says Emily Sanders, managing director of United Capital Financial Advisers in Atlanta. We will make saving and planning for our retirement a shared priority. Except for a few employer based health insurance plans, complications related to child birth are not covered by health insurance plans. For instance, while computing total income, deductions can be claimed under Section 24 and Section 80C for interest and principal repaid on home loans each year respectively for taxation purposes. Additionally, many lenders also provide lower interest rates to women borrowers. As a couple you tackle these goals as a team, often getting ahead financially much more quickly than a single person could. Savings and investments: Last but not the least, spouses have to account for their annual savings and investments for taxation as well as personal purposes. But you need to work together to come up with a game plan. The premium needs to be paid for 20 years. This is not possible at the moment for the couple. In the absence of immediate legal heirs, it is vital for the spouses to decide how their wealth is distributed in the event of any mishap. The rent is being paid from Ramesh’s bank account. Article content. Rank your financial prioritiesand make a list of the steps it will take to accomplish these goals and where they coincide. They are planning to have one in the next year. Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances. For many couples, your financial life together evolves over time. I help couples all across the country learn how to effectively manage their finances as a team, integrate their financial accounts (if you want to, at least! This is way below the national average of 28%. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. The cost of insurance, however, depends on age, occupation, lifestyle and overall health of the beneficiaries. Their current expenses prevent them from saving anything more. Alternative investment can be in another ELSS fund or a ULIP with low charges and minimum 5 lakhs life cover. The Rameshs currently are saving/investing only about 14% of their total income. This is because their current taxable income, post their investments and their HRA expenses, is currently in the 10% taxation bracket only. They are staying in a rented house with Rs.9,000/- as rent. Contingency fund: Both the spouses should earmark a certain percentage of their income to contribute to a joint contingency fund. Required fields are marked *, Copyright © 2020   BankBazaar.com. The Rameshs do not have any children now. Joint loans: Tax laws of India offer various concessions and deductions on loans – principal and interest payments. A couple navigating the opportunities and pitfalls inherent in such a complex cross-border environment should find advisers who can identify the key issues and formulate a strategic framework from which to develop comprehensive financial planning and wealth management solutions. Related to working together to stay on track financially as a family, it’s important to divide up the financial tasks between the two of you. When they collide you need to figure out which you can delay or even live without. Age-gap relationships are becoming more common in Arizona as people are choosing to marry later in life. Financial honesty is incredibly important but unfortunately, many couples won’t broach this topic until it’s too late. The health premium for their age group for Rs.2 lakhs cover will be about Rs.2,500/- each. They need to start a health plan and also start saving for expenses related to child birth and child care thereafter. This means that the tax saving: investment required ratio is 1:10 (they need to save/invest 10 times the amount of tax that they plan to save). Personal Finance for Unmarried Couples Millions of unmarried opposite-sex couples live together in the US. 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