It is wedding season and many couples will be looking forward to a fulfilling life of togetherness. Shopping, wedding planning, invitations, decorating homes, or, in some cases, moving to new homes in anticipation of the big day will be on in full swing. Through all this, it is also important to discuss and plan finances. Here are a few words of financial wisdom for couples to avoid stress later.

New Beginning

Getting married can be an exciting time, but it can also bring in a set of expenses and financial complexities. You may need to opt for use of credit or loans to help tide over the costs. Hence, it is important to discuss and plan your finances together. Let us see how Swati and Rohit (our imaginary couple) managed this delicate topic.

Discuss Finances To Avoid Financial, Marital Stress

Swati and Rohit met through common friends and before they knew it, they were ready to get married. Their families planned a grand wedding. Rohit also decided they would need a bigger place to stay after marriage. They knew they both had decent incomes and, together, they would be able to take on the additional burden. Like many, Swati, too, found talking about personal finances difficult. But, she knew that money is the most common issue couples fall out about.

So, for a better future together, she decided to take the initiative and discuss income, spending habits, debts and savings with Rohit, even though they both had different attitudes to money. Not only did they talk about how the day-to-day household finances would work, but also persevered to discuss eventualities. It was not a comfortable discussion. There were moments when they felt awkward and pessimistic talking about death and separation. But they knew that this discussion would further strengthen the bond between them.

After their discussion, they decided to apply for a home loan together and take a personal loan in Swati's name with Rohit signing as a guarantor. For both these loans, the bank needed all the required details and documents of both of them for processing the application. They were aware that any delays in repayment would affect both their credit histories as recorded by the bank and provided to a credit information company (CIC). This history is available to future lending institutions in the form of credit information reports (CIRs) that CICs provide to lenders.

Credit History

Banks and NBFCs provide a record of your loan and credit card repayments to CICs. A CIC is an independent organisation that compiles public data, identity information, credit transactions and payment histories of consumers. When you apply for a loan, banks have to make sure you are who you say you are and that you are likely to repay the loan. They will look at the information in your application and will check your credit report from a CIC. The report usually contains identity information, past and present credit obligations, previous addresses and enquiries made by banks for all your loan applications. If your report shows that you repay credit on time, this will usually help you get credit at favourable terms. Thus, it is important to maintain a good credit history.

Rights And Responsibilities

Swati and Rohit realised that discussing their past and future financial commitments would be a good start to their new life together. They started by ordering copies of their credit information report and going through them together. Drawing up the household budget was a tedious but necessary exercise. They split the liabilities of the home loan and personal loan and other household expenses and decided who would pay for what. Thus, they worked out how much they would have to spare. Post marriage and after moving residences, Swati and Rohit got their address changed in the records of all their banks and other public documents like passports, voter ID, etc. Swati had also changed her surname. She got that updated, too. By doing this, they avoided becoming victims of possible frauds. Swati and Rohit were also aware that they were legally responsible for each other's loans - whether it was a joint loan or a loan in which one person is a guarantor.

Happily Ever After

Here are some key tips one can take away from Rahul's and Swati's example:

i) An open discussion regarding finances will only strengthen the bond - so don't feel awkward

ii) Segregate the domestic financial responsibilities clearly with your spouse

iii) Use the CIRs to understand your current credit situation and ensure all details in it are accurate and regularly updated

iv) Plan your finances taking into account all liabilities existing and envisaged