Taking the right financial steps before getting married

Financial Planning | admin | August 24, 2011 at 9:18 am

Sunil Mehra is 25 years old and has been working for the past three years. He has been dating a girl for a year and her parents are insisting that they marry soon. Though he has tried to explain that he needs time to stabilise his career, they think he can manage it even after marriage. Sunil lives with his parents and has been contributing to the family's monthly budget. His parents are looking forward to a bigger home and a better life since he started working. Sunil also wants to buy a car before he gets married, even if he cannot buy a house by this time. What are the issues he should be aware of before getting married?

Given Sunil's financial condition, he may be marrying a bit too soon. After marriage, the expenses, both expected and unexpected, will rise, and Sunil may end up swiping his credit card to pay for things that don't fit in his monthly income. It is a costly way to fund his expenses and he may find himself burdened. Sunil needs to build a corpus, preferably in bank deposits and mutual funds, so that he begins his life on a solid footing without walking into a debt trap.

He may also have to balance his personal expenses with his contribution to the family budget. It will help if his wife is employed and can contribute to the budget as well as expenses. Sunil may have to enhance his income in order to meet the aspirations of his parents and possibly his wife. He may not have adequate financial assets or an income high enough to buy a house so soon. So he may have to consider higher education as a serious option. With 3-4 years of work experience, he can opt for higher studies to improve his prospects. He may have to quit his job and take an educational loan. This may be a difficult call to make unless his wife is employed and willing to support him and his family while he studies.

Sunil should also curb his spending habits to achieve financial stability before getting married. Buying a car at this stage will not be a good idea since the EMI will reduce his ability to save. Besides, car is a depreciating asset which will earn him no return. Sunil needs to invest in assets that appreciate at this stage of his life.

Source: Economic Times