Marriages are made in heaven but when talk of money enters the mix, they generally land right back on Earth.
Here are some of the conversations that a young married couple, Kirtana and Karthik (names changed to protect privacy), found they were forced to have when it came to managing their finances.
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Kirtana and Karthik were a newly married couple. They had met through friends and hit it off right away. In a few months they were engaged and within a year they were happily married. The two were staying at Karthik’s parents’ place while they figured out where they would live. It all sounds rosy at this point. But believe it or not, this was the precursor to tough conversation #1.
Additional reading: 5 Money Management Tips For Married Couples
Tough money conversation #1 – To rent or buy?
Newlyweds, of course, need their space and Karthik and Kirtana were no different. So, Karthik started to look for a flat to rent. He just assumed that the cost of renting was easier to manage than paying the down payment and EMIs on a Home Loan. “Have you thought this through, Karthik? Have you really thought this through? Have you done the math?” asked Kirtana. “Are you sure that renting a flat is better than buying one?” Kirtana had one question after another and to be perfectly honest, Karthik was starting to get a bit annoyed. But not wanting things to escalate, he kept his cool and wisely said, “Okay, Kirtana, let’s talk about it.”
Buying a flat seemed like a good idea – there was capital appreciation and, of course, no rent to be paid. But on the other hand, it was quite an expensive proposition. Still, it was worth considering.
Additional reading: How Early Should You Buy A Home?
There were several things that they had to think about before deciding what the best option for them was.
- They first had to take a look at their income and expenditure and decide what type and size flat they could afford to buy and in which locality.
- They then had to see if they had sufficient funds to make the down payment on a flat.
- Were they both okay with, say, living in a larger place a little away from the city?
- Could their parents help them out with some of the expense involved?
- Should they go for a brand new flat with a host of amenities or should they opt for a slightly older apartment with fewer amenities but which came at a lower cost?
Evaluating the pros and cons of buying a flat versus renting and finally coming to an agreement was one of the toughest but most important things that Kirtana and Karthik had to do as a couple – make a joint decision they could both be completely comfortable with. They finally decided to buy a small but new apartment, slightly away from the city centre but surrounded by greenery and with amenities like a pool, gym and children’s play area. They took a joint Home Loan and both of their parents helped them out with the down payment amount.
If you find yourself in a similar situation as these two, read this before you decide whether to rent or buy a house – Should I Buy A House Or Continue Staying On Rent?
Tough money conversation #2 – The dreaded “B” word
We’re talking about Budgeting! One would imagine that now that the matter of where to live was settled, things would be smooth sailing. But destiny always has other plans.
Additional reading: 6 Common Budgeting Blunders And How To Fix Them
It was only when our two lovebirds were setting up their home did they realise how expensive it all was- “Do we have enough for that wide-screen smart TV this month?” “No, getting a fridge is more essential.” “I wish somebody could have gifted us a UPS inverter for the wedding instead of that hideous dinner set!” grumbled Kirtana.
No longer was it as easy as wanting a fancy new toy, and just saving up and getting it. Every paise of their double-salary income would need to be budgeted if our couple was to have a comfortable present and a secure future.
Broadly, funds would need to be allocated under the following heads every month:
- Household operational expenses – Groceries, electricity bill, monthly maintenance, internet bill, cable TV bill, salary for the maid who does the top work and dishes, the cook or the tiffin service, and a little saved up every month for emergencies, like if the fridge suddenly broke down!
- Investments towards tax saving, better returns and retirement – Kirtana is a regular reader of the BankBazaar blog, and she knows that one of the best ways to supplement your income is to make your money make money for you. They also need to save up and secure their future income so they can retire to the farm house of their dreams, and it couldn’t be a moment too soon! And they should try to achieve this while saving a good chunk of taxes.
Here’s an article that can help you plan for these goals – 7 ways to make the best use of a dual income!
- Discretionary spending – And finally, what remains is for “discretionary spending”. For the so-called frivolities of life – hobbies, travel, gadgets, eating out, weekend parties and maybe even that glitzy set of wheels that will make your friends positively green with envy.
Tough money conversation #3 – Do you need or want it?
“We should buy a car,” said Karthik one fine day, shortly after their third-month anniversary. “A car?” responded Kirtana, with a raised eyebrow. “Isn’t it easier to just take a cab whenever we want? And we already have a scooter.” “I agree,” said Karthik. “But we could go on road trips like we’d always wanted to! And our parents could use it to go to the supermarket or their check-ups.” Ahhh, he sighed, dreaming about zipping around in a new car.
Kirtana knew that Karthik really wanted a car but they would need to take a loan to get it and one must be judicious when taking credit. So, she asked Karthik a few pertinent questions –
Is it wise to buy the car sooner rather than later? Will it make your commute more comfortable, convenient, safer and healthier than on a scooter? Maybe even have a little fun on the weekends? If yes, then it would perhaps be worthwhile taking a Car Loan and buying it today, rather than wait months or years to save up for it.
“Yes, yes, and yes again!” shouted Karthik in response to all those questions. And so, the couple went ahead and took a Car Loan and got themselves a brand new i20!
However, Kirtana, the more cautious of the two insisted that they not take any more loans. At least until the Car Loan was paid off. It’s important to be able to differentiate between wants and needs and indulge in things that you want only after a careful assessment of your finances.
Additional reading: Planning To Take A Car Loan? 5 Factors To Consider
Tough money conversation #4– Health Insurance
A week after their wedding, Latha Aunty, Karthik’s maternal aunt, dropped by. It wasn’t just a social visit to wish the couple. She had another motive. She was a Health Insurance agent and wanted to pitch insurance to them. “Oh Aunty,” said Karthik. “I have my office insurance. I don’t need this.” Fortunately for them, Kirtana was interested. She was the type that loved reading and followed quite a few financial blogs. “Listen to me, Karthik,” said Kirtana. “I have read all about this. We’d better not to rely solely on company insurance when it comes to our health. First of all, the cover might not be sufficient. And what if you or I lose our jobs?” Latha Aunty also jumped in adding her two cents. “Beta, if you are planning to have a child, you should take a policy with a maternity cover. It will also cover the baby bill and baby’s vaccinations. It will be great savings for you both.” “Yes, Aunty, you are right,” said Kirtana. “We should do it right away as most companies usually have a waiting period for the maternity cover.”
Kirtana is absolutely right. So, if you’re planning to get a family Health Insurance policy, it’s best to do it as soon as you’re married. And no need to wait for Latha Aunty to come knocking. You can get all the information you need and compare different options online. Click here to know more.
Additional reading: 7 Helpful Tips To Choose The Best Health Insurance Plan
Tough money conversation #5 – Life Insurance
Karthik was lying down on the bed playing PUBG on his phone when Kirtana entered the room with a smile. “Do you know what today is? It’s our two-year anniversary,” she said without pausing for an answer. “You know what you should do?” “What?” asked Karthik warily. Kirtana had a way of coming up with ideas and suggestions that he really didn’t want to talk about. “You should get life insurance!” “What?” he said again. “We should both get life insurance,” she said. “No, we don’t have to, Kirtana,” said Karthik. “We don’t need another expense to worry about.” “But what if you die??” said Kirtana. Her voice had developed a slight tremor. “Why are you talking about me dying,” said Karthik. He was starting to get angry. “What’s the matter with you, Kirtana?? Have you lost your mind?” “I’m pregnant,” she said. And burst into tears.
At first, Karthik couldn’t fathom what had come over his wife. Wasn’t this good news? But Kirtana was absolutely right to be concerned. When you have dependents, Life Insurance will ensure that, at least financially, they are taken care of. And with a little one on the way, Kirtana, clearly the planner in this relationship, wanted to make sure that the child’s future would be secure. She calmed down after a moment and explained that she was just concerned about their future and Karthik understood this. “Please don’t cry about these things, Kirtana,” he said. “You know I’m always here for you.”
We might not all be able to leave a lasting legacy for our children. Or ensure that our parents are comfortable in their old age. But we have the ultimate safeguard to make sure they are well taken care of should the unthinkable happen. And that is – Life Insurance.
There are so many options- retirement plans, term plans, equity-linked tax-saving plans and combinations thereof. But don’t worry, we’ve simplified all of it for you here – How to Choose The Right Life Insurance Policy
These are just a few of many tough conversations that couples have when it comes to their finances. Keep reading our blog for more real-life solutions to the real-life problems faced by Karthik and Kirtana.
Found yourself in a similar situation with your spouse? Leave us a comment in the comments section below and tell us how you handled it.