Financial Tips for Newlyweds

Marriage: the only ‘investment’ where your returns depend entirely on how well you manage the interest. Congratulations on starting your happily-ever-after! The vows are exchanged, the dance floor memories have been made, and your Instagram is shining with “#CoupleGoals.” While tying the knot is a beautiful beginning, managing finances as a couple is where the real teamwork begins. After all, dreams need more than just chemistry; they need a budget! When it comes to finances, marriage is all about teamwork – aligning your goals, understanding each other’s money habits, and planning for the future together is key. Whether you’re saving for a dream home, planning for children, or building a legacy, a little financial strategy goes a long way. It’s not just about covering bills – it’s about creating a future you both love. So, get ready to share more than just your heart; it’s time to merge your financial worlds and build a future that’s as rich in security as it is in love.

✓ Combine Dreams, Not Debt

One of the first ‘reality-checks’ in marriage is talking about each other’s finances. As newlyweds step into a new chapter of life, discussing debt is one of the most important, yet often overlooked conversations. Financial obligations such as student loans, credit card debt, home loans, and medical expenses can quickly become a source of stress if not addressed early. According to the Finance Ministry, the total student loan debt in India has crossed Rs 90,000 crores with an annual growth rate of about 15%. This can be impacting millions of young professionals starting their married life. Many couples face the weight of home loans that can exceed ₹50 lakh.

Facing these realities head-on can help couples manage debt more effectively. Whether it’s prioritizing high-interest loans or consolidating debt, the key is to align on a strategy early on. Financial disagreements are one of the leading causes of tension in marriages, according to the Indian Bankers’ Association.

✓ Streedhan

Dear ladies, empowerment beings at home! So, let’s talk about streedhan. Often misunderstood as just “wedding gifts,” streedhan is your rightful property, which includes jewelry, cash, and other assets given during your wedding. Legally, it’s yours, and no one – not even your spouse, can claim it. The concept of streedhan dates back centuries and remains highly relevant. Under Section 14 of the Hindu Succession Act, 1956, streedhan legally belongs to the wife, ensuring her financial independence.

Why is this important? Think of streedhan as your emergency fund, a symbol of financial independence passed down generations. Instead of keeping it locked in a locker, consider converting some of it into investments like gold ETFs or mutual funds. This way, your streedhan doesn’t just sit pretty; it grows!

✓ Pro Tip:

To leverage streedhan for wealth creation:

• Invest in Gold ETFs or sovereign gold bonds for decent returns.
• Diversify into mutual funds or index funds, converting part of streedhan into a portfolio that grows over time.
• If your mummy-pappa have blessed you with a big, fat streedhan, why not make it work for you and complete it with real estate. It’s not just a shiny new toy to impress the relatives, it could actually start making you some serious money.

Did You Know?
Gold has delivered an average annual return of 9.3% over the last decade in India, it can be a robust addition to your portfolio.

✓ Love + SIPs = Forever

Build your joint investment portfolio

You’ve heard of Systematic Investment Plans (SIPs) – now meet Couple SIPs! Okay, we just made that word up, but hear us out. As newlyweds, starting a joint SIP can align your financial goals. Be it a down payment for a home, funding a child’s education, or a world tour anniversary, SIPs let you build wealth steadily without compromising on your current lifestyle.

Just like your wedding outfits, this requires coordination too! Consider this – Jointly investing Rs. 70,000 monthly and stepping it up by increasing your SIP by just 10% each year in a mutual fund offering 12% – 15% annualized returns could grow to over ₹17.36 crore in 20 years.

Create a joint financial vision by setting both short-term goals (like vacations or a new car) and long-term aspirations (such as buying a house or building a retirement corpus). Assign SIPs to each goal, ensuring disciplined investments.

Pro Tip:

Discuss with a financial advisor (like your friendly wealth manager) to choose mutual funds that suit both your risk appetites.

✓ Yours, Mine, and Ours

A successful marriage strikes a balance between individuality and togetherness – your finances should too. Adopt the “two wallet” strategy where you have:

• Personal Accounts: For guilt-free splurges.
• Joint Account: For shared expenses like rent, bills, and grocery (and that fancy air fryer you didn’t really need).
• This setup avoids unnecessary fights over “Who spent ₹5,000 on that online sale?” while ensuring transparency.

Pro Tip:

Automate contributions to the joint account.

Adopt the “50/30/20 Rule”:

a. 50% for shared essentials like rent, groceries, and utilities.

b. 30% for individual discretionary spending

c. 20% for joint investments.

✓ Emergency Funds

Emergencies don’t RSVP before showing up. In India, medical emergencies are the leading cause of financial distress, with 75% of households incurring high out-of-pocket healthcare expenses. A well-funded emergency reserve can prevent such crises from making redemptions from your investment goals.

Set aside 3-6 months’ worth of living expenses in a high-yield savings account or a liquid fund. Avoid dipping into this fund for discretionary expenses – it’s your financial safety net.

Pro Tip:

Liquid funds have historically offered 5-7% annual returns, making them a superior choice to idle savings accounts (which typically offer ~3.5%, varies from bank to bank).

✓ Insurance

India has one of the lowest insurance penetration rates globally, at just 4.2% of GDP. Also, medical inflation in India is growing at a staggering 14% annually, underscoring the importance of robust health insurance to keep up with rising healthcare costs.

Protect each other’s future by ensuring you both have adequate coverage. It’s ultimate “I have got your back” gesture. There’s something oddly romantic about securing your partner’s future.

• Term Insurance: Opt for coverage 10-15 times your annual income. This ensures that your spouse is financially stable in your absence, giving them one less thing to worry about during a challenging time.
• Health Insurance: Ensure comprehensive coverage for both partners, including maternity benefits if starting a family is on the horizon. After all, unexpected medical costs can derail even the best-laid plans.

Pro Tip:

Don’t forget the MWPA (Married Women’s Property Act 1874) : This lesser-known legal provision allows married women to protect their assets and ensure that they are passed on to their chosen beneficiaries, even in the unfortunate event of a partner’s death. It’s a smart move to safeguard the financial security of wife and children (if any).

If you already have policies, review them to check if adding your spouse as a beneficiary makes sense.

✓ A good Financial Education should be A Real Couple Goal

A couple that learns together, earns together! Make financial education a shared hobby. Attend workshops, read books, or follow blogs that simplify investing. Equip yourselves with knowledge to tackle market fluctuations, tax laws, and portfolio diversification confidently.

Some additional tips:

✓ Many young couples dream of retiring early and traveling the world – use tools like EPF and NPS to build your retirement fund from day one. Start your investments for this goal early and follow a very disciplined approach, or your early retirement dreams might hit a roadblock when you realize you’re short on funds later on – supplement with index funds or PMS for higher returns to stay on track.

✓ Tax planning as a couple: Instead of a traditional present, gift each other shares or mutual funds, completely tax-free! You can also open a PPF (Public Provident Fund) or invest in tax-saving FD under your spouse’s name for an added ₹1.5 lakh deduction under Section 80C. (Gifts between spouses are tax free, but any income generated is clubbed under giver’s income).

✓ A In India, weddings are more than just family events – they’re an economic force, with an annual $130 billion wedding. For context, between January and July 2024, over 42 lakh weddings generated an estimated INR 5.5 lakh crore in spending, with another INR 4.25 lakh crore expected during the November – December peak wedding season. And let’s not forget the recent gold import duty cut, ensuring that gold remains both a fashion statement and a solid investment. Also, 75% millennials claim that they are taking charge of their complete wedding expense without any dependency on parents, so, if you’ve just survived the expense tornado of a big Indian wedding, it’s time to tone down the splurging. Instead of a lavish second honeymoon in Switzerland, how about setting aside a travel fund and exploring budget-friendly destinations?

Marriage is a beautiful journey, but it’s also a partnership in every sense of the word. By planning your finances together, you’ll not only secure your future but also strengthen the bond you share. By starting your financial journey with transparency, planning, and smart investments, you can ensure that your “happily ever after” includes financial freedom.

So, here’s to love, laughter, and compounding wealth!

Ms. Mahati Pandya
AVP – Marketing & Strategy at Epsilon Money

The information/view given in this article is for general informational purposes only and does not constitute any financial, legal, or investment advice. Readers are encouraged to seek professional advice before making any financial decisions. The author and publisher are not responsible for any financial loss or damages resulting from reliance on the information presented in this article. All investments involve risk, and past performance is no guarantee of future results. Tips given in the article are for illustrative purposes only and may not reflect actual scenario. Investment decisions should be based on your personal financial situation, goals, and risk tolerance. Investment in securities market are subject to market risk, read all scheme related documents carefully before investment.