Here is how you can make your dual-income work as a couple

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Dealing with money as a couple may be challenging, especially when two incomes and two financial circumstances meet. Not only do both of your salaries double when you marry, but so do your investing prospects.

You and your spouse share your income and expenses and devise a strategy for future savings. Experts suggest that if you’re getting married, you should start thinking about your finances early on because as your family expands, your finances will only get more complicated.

“Conversations about money may seem awkward, uncomfortable, and business-like. But an open conversation on how much the family earns, how much each partner will bear the expenses, how much each partner will save them money, how assets need to be purchased. Further what loans to be taken, what are the shared goals, what are the individual goals etc. allows to develop a thought-out plan, leading to a shared family vision and financial harmony,” explained Anup Bansal, Chief Investment Officer, Scripbox.

“Address an income imbalance, if there is one. Talking about it as a couple can help you effectively distribute the income across expenses. For instance, it is sensible for the higher earning partner to pay the home loan EMI and for the lower earning partner to pay the utility expenses like groceries, monthly bills, etc,” concurred Anup Seth, Chief Distribution Officer, Edelweiss Tokio Life Insurance.

The following are a few strategies for maximising the benefits of dual-income.

Debt-free

When it comes to young couples’ finances, the most common issue is debt. Paying off debt, whether it’s a credit card, personal loan, mortgage, or car loan, should be your first goal.

“Make sure as a couple you mutually meet all the expenses from only one source of income while the other goes 100% completely into savings. This method ensures you are always saving money, and you will continue to find clever and frugal ways to save money since you are only living off of one person’s paycheck,” said Ankit Agarwal, Managing Director, Alankit.

Budget

Your financial plan must be well-thought-out, as well as reasonable. The money you have saved over must be set aside or invested in helping you achieve your goals. Try to be a little more demanding on yourself if you can.

If you want to see a difference in the overall status of your finances, you must be willing to make cuts sure of your spending that is both practical and sustainable.

“It is quintessential for you to not only have a logical but a realistic budget in place. It would help if you made sure to keep your surplus income in saving or invested somewhere to meet your future financial goals,” pointed out Agarwal.

Insurance

You and your family now have a firm financial foundation on which to stand. Unfortunately, calamities and accidents happen, and it might leave you broke if you’re unprepared. You require insurance to safeguard your life, your earning potential, and your capacity to maintain a roof over your head. It provides reassurance, safety, and a cushion. Every couple should have insurance coverage in place.

“Invest your time and money in creating a contingency fund. In addition to life and medical insurance, a contingency fund can prepare you for unforeseen events that can potentially impact your income,” said Seth.

Child education planning

When it comes to children’s education and marriage, sound financial planning is critical to ensuring their well-being and helping them to achieve more incredible things in life. In addition to a good education, you want your child to have a nice wedding as well as a successful career as an adult.

Start thinking about the child’s future schooling and marriage as early as possible. This is because if you start saving and investing sooner rather than later, you’ll have more time to accumulate wealth as a couple.

Retirement and tax planning

To be sure, saving for and planning for retirement is a pressing issue. People who want to maintain their current standard of living after retirement must prepare ahead because they are living longer. If your workplace has a provident fund, you must save at least an equal amount to take advantage of it regarding retirement savings.

Further, it is imperative to consider the tax implications that may need to be considered during the planning and execution phases. “It may be better to have a rental lease in joint name to take advantage of HRA tax exemptions. Each partner should also create a ‘Will’ for the estate transfer plan as per their wishes,” said Bansal.

“Overall, couples should create a common financial plan that addresses all aspects of family finances while retaining individual interests intact. It is best to work with a qualified financial advisor who can help in the planning process while keeping individual preferences and requirements in mind,” added Bansal.