While the recent budget didn’t have anything to talk home about, and didn’t bring much cheer to the aam admi, the budget you create with your spouse can definitely bring a smile. Well, maybe not now, but definitely in the long run. In a previous post, (Budget In a Marriage) I talked about how important it is to include a budget in your marriage. If you’ve not got anything done as yet, here’s hoping this will spur you on. I cannot stress enough on how important it is to make a budget. A budget helps you balance what comes in vs. what goes out. So, you know exactly where you money actually goes instead of wondering where it all went!
A couple of months or maybe a year or two after your marriage, you might find yourself getting along quite fine. And this might make you wonder why you need a budget at all. But what about the house you’ve always wanted to live in? The luxury car you’ve wanted to drive to work in. The fancy holiday that you’ve always dreamt of? Or overseas education for your children?
Hard work apart, to achieve these dreams, you need some solid plans. Similar to any goal you want to achieve, a budget requires planning and discipline. Admit, it’s not that fun or even that easy. But important it is. If you think it’s too daunting to do it by yourselves, get help from financial advisors. And here are some tips.
Make a budget, take inventory
Grab a pen, or open an excel sheet and jot down your income vs. your expenses. It might take a few months to get your average outgo. Start by making a note of all the expenses you incur in the month. Also, make an inventory of all your current loans – housing, car, bike, education, etc., your investments, credit card bills and insurance policies, an estimated value of your assets as well as your monthly income and expenses. Once you have a tally of your assets and your liabilities, you can calculate your net worth. There are some online applications that can help you do this, or turn to your financial advisor to help you. The aim is to check your net worth over the years. And, with sound planning, you’ll see it increase!
Create an emergency fund
While planning for our financial success, it’s extremely important not to overlook an emergency situation – an accident, some debt that you suddenly have to clear or maybe periods of unemployment. We always feel that life will go on just the way it is, but one never actually knows. Though many of us have several insurance policies, it’s always a good idea to have a ready cash fund to dip into, in case of an emergency and without resorting to borrowing from friends or mounting a debt. How much is enough will vary depending on your expenses or the nature of the emergency, but a general thumb-rule is to have approximately 4-6 months worth of expenses in an emergency fund. And make sure that you use these funds for a real emergency and not feel tempted to dip into it for other expenses.
Prepare for college expenses & retirement
Once the kids come along, you’ll have to start preparing for their education expenses. The recent ad of Bunty’s father getting a heart-attack on hearing his son’s school fees shoot from Rs 2,000 to Rs 10 lakhs is no exaggeration! Talk to other parents, financial advisors and do some online research on several financial plans for your child’s education, and start putting away money for it.
You’re not going to be working all your life, nor would you want to live off your children
a la ‘sar uthake jiyo’ ads. Talk to your spouse about your sunset years and start saving for it. I’ve known colleagues who have started saving for their retirement from their first pay packet! Now, that’s what I call being farsighted!
The above are only some pointers towards financial success in your marriage. The most important thing is to get started. And do share some personal budget stories and tips with us!