Marriage, in financial context, sounds heavy, especially in case of young Turks just starting on their career paths and not yet considering themselves stable in their line of profession. More so, in the context of our country, where lavish marriages are a trend, involving expenses beyond the personal capacities of the individuals getting married.
Personal financial situations may vary a lot from one individual to another. Yet, regardless of our financial situation, the steps to achieving a smooth financial life and a happy marriage can be generalized for everyone, beginning with the commutation of household environment.
First, we begin with the differences marriage can bring to your financial environment and importance of stability in financial condition. The issues that you must pay heed to after marriage to adjust to the new environment are as follows:

Parent’s Indulgence
Before marriage, many of us whether men or women, involve our family members, especially parents, in our own financial matters, mostly for old age wisdom and to minimize our own headache of managing money ourselves.
Post marriage, you will find that this habit of your spouse (where both of you are earning) a bit baffling. Remember though that it goes both ways, and first thing to do for you is to discuss with your spouse as well (even if only one is earning), even when you want to continue consulting your parents about your money management.

One is Two or Two is One
Before marriage, our financial decisions are sometimes reckless, as there is no one to questions it and there’s no responsibility (esp. if there’s no responsibility). New influx of money and financial freedom is exciting enough to make everyday a celebration, and even if account balance goes to zero before the end of the month we don’t feel stressed about it, after all payday is just a couple of days ahead.
Post marriage, this scenario will require rethinking, as it may play a spoilsport with your plans and relationship (esp. for men). Post marriage, one must shun the old solo run habits and focus on life from the two point of views, this may slow you down a bit but ultimately will be paying off in the way of a peaceful and happy married life.

I am the Expert
Some of us by experience and by knowledge, or even simply by interest, start to seriously indulge in our financial matters early on. Before marriage, that may seem like a perfect life and a series of robust decision making spree. This will build lot of confidence in you regarding your financial matters.
Post marriage, this confident can be deadly if your spouse is earning and looking for financial control. In such scenario there is generally one choice left, you both say, ‘I am the expert,’ and start managing your finances separately, but this can be upsetting, not just for you but for the kids (if your marriage lasts long enough), and for all future financial decisions, as the issue of who handles what will arise each time. So the experts must file for consensus on financial matters and manage everything jointly instead of keeping a curtain in between.

Utility or Fun
Under current environment, singles are less willing to spend time and money on utilities like - washing, cooking and other household chores. It’s almost like returning to bed after a party; i.e. you don’t want to but you must, and therefore, priority to such needs is low in this phase, but changes dramatically after marriage.
Post marriage, utility takes the center-stage, while fun activities must also remain important consideration. A comfortable household is a position which should be a priority post marriage for both you and your spouse. Providing for all may not be possible at all times but, if some time is devoted towards planning fun activities along with fulfilling initial family expenditures, it is easy to overcome this hurdle, while keeping the enthusiasm up and running.

Planning for emergencies
Our risk taking capacity is high while running solo and perhaps some of us have already tasted success or failure in risky ventures before getting married. Before marriage, only emergency planning required is for self, additionally parents are also there for support. At maximum you require a Personal Accident Policy, a Health Insurance and some amount as your emergency fund.
After marriage, with the addition of another individual in your life, requirement of such emergency measures and more reaches a new zenith. If the other partner is not working this responsibility falls completely on the earning member, and proper emergency planning is essential for a stable financial future.

Planning for Future
This is something which should start even before you start to plan for marriage, as money is going to be your constant partner, savior and friend whether you marry sooner or later. Only difference is, before marriage our concern is mostly with our own needs and we may not worry much about our long term goal. Though, some of the goals must be acted on early, while marriage will add some more whenever it happens.
Initial liquidity needs are important, and must be taken care of while saving for the long term goals. Even financing marriage expenses can be a goal for single individuals. After marriage, goals merge for the couple and that’s where the challenge will be for newlyweds.

Motivations for Prioritizing Personal Finances
I understand that in order to undertake any venture you need to find right motivation to accompany you on the way, and thus given below are few reasons why setting your personal financial priorities after marriage could be important:

• If you are the sole earning member:

1. Financial Stability will take some time, your professional growth is important
2. Remember that you must plan for yourself and your spouse
3. Well prioritized finances will allow you space to pursue your profession without worries of financial stress
4. Keep the mental stress away, which may build quickly in current work environments
5. Finally keep your family safe from financial worries in case of emergencies and untoward incidences
6. In case of your disability spouse will know how to take care of financial matters

• If both of you are earning:

1. Making decisions together will save the family from blame game, as financial loss of one can affect the other as well.
2. Savings is easy but combining your money can be even more rewarding
3. Planning together can be fun.
4. Iron out differences of opinions and de-stress over future financial goals
5. Involving your spouse in your financial planning will make both of you feel more inclined towards family’s future.
6. It’s easier to plan for increasing the family too.
7. In case of emergency your spouse will know what to do to pull additional resources

Personal Finance Priorities for Newlyweds
Now that we are rightly motivated and clear about what we want out of such exercise, let us have a look at what all should we account for while setting up family finances in place? Discussed below is a comprehensive list that you may consider for your new family:

1. Talking Money Matters
   Money talks are as important for newly married couples as the talks for expensive vacations and getaways; after all it’s the money which will provide for all of it in the end. The least expensive and most productive ways to spend your weekend together is by putting your finances in place, deciding on future course of action and building credibility and sense of responsibility between the partners over money.
   Benefits of monetary transparency are enormous between couples, for example: it instills a sense of relief in the other that their partner trusts them, and in return they will feel open to undertake responsible position in case of money matters.
   If your spouse is working, it is more important to open up about financial matters especially for the one earning more. The simple reason being, the higher earning spouse will consider himself to be more capable of handling financial matters. This sense of superiority leads to the temptation of hijacking the process and dictate terms to the lower income partner. This may lead to discord, and it is advisable for a smooth sailing marriage that equal representation is given to both the partners.
   Discussing them over your free time will allow you to experience free flowing of creative ideas to finance not just your goals but your aspirations while strengthening your relationship further.
2. To Become One or Remain Two
   This is one of the most contentious of issues between partners, especially when both of them are earning. Usually when parents are involved with both spouses in their personal money management, their suggestion is to keep the finances separate, but as partners in life you are expected to handle your lives together, and so the financial matters.
   If not complete some level of transparency pays in not just keeping your finances in place but also ensuring peaceful and healthy environment in the house.
   For single income couples the earning member must strive to make arrangements for his/her spouse to become financially independent in future, it benefits in two ways:
   
   1. Increase income and tax savings within the family
   2. Be financially safe under emergencies
   For double income couple as well, saving taxes can be a great advantage of joining their finances together, and planning for their combined financial future.
3. Update Financial Documents
   Financial documents are most important piece of records, holding the key to access most of your resources. After marriage it becomes the foremost responsibility of the couple to update their new status in their financial records, for smooth functioning of financial transactions.
   These records include:
   • Bank Accounts
   • Provident Fund Accounts
   • Insurance Policies
   • Mutual Funds holdings
   • De-mat Account etc.
   Especially for women it is imperative that they update their information in all such places to avoid any hassles in receiving or making payments due to change in their name. Also remember that for some financial instrument spouse takes precedence in nomination over all other relatives, i.e. EPF, health policies, life insurance policies etc.
4. Deciding on Lifestyle Expenses
   Planning does not mean you should live an ascetic life devoid of enjoyment, instead both of you should be able to enjoy your money together as well, this brings us to the lifestyle expenses. Cutting on lifestyle for future goals is advisable only when there is practically no other option. Though, it is advisable that you remain within your pockets, you should work on maintaining a lifestyle which is healthy, both from physical as well as financial point of view.
   Typically in the initial years it is difficult to hold on to the line, but slowly with some efforts discipline must be inculcated in financial matters within the family to increase savings. Once again, this step will involve both husband and wife whether both are earning or any one of them.
5. Gear up for Emergencies
   Financial emergency preparation involves following two aspects:
   1. Insurance Policies
   2. Emergency Funds
   While insurance policies are easier to purchase, one should be careful with the benefits available in Health Insurance, Personal Accident and other policies. For example, checking whether your health insurer will only provide ‘cashless hospitalization benefits’ or also ‘reimburse your doctor visits or regular health checkup bills’ can be a good point to start with.
   For life policies ensure they cost less and the claim procedure is simple. A qualified financial advisor or wealth planner can be engaged to decide the correct amount of insurance cover required. Inadequate insurance may make financial life of your spouse difficult after you in case you are the sole earning member.
   For emergency funds, it is advisable to take expert help, but to start with you can target at least ‘three months’ of total household expenses. This pool comes in handy and keeps your financial worries at bay in situations of job loss or disability.
6. Planning for Goals
   Imagining your future financial goals may not be a difficult task, but structuring them into attainable and scientifically defined objectives may require more than casual imagination. It is advisable that you involve a professional wealth manager / financial planner to plan all your goals along with your emergency planning. Here is a list of some common goals which hold their importance for almost every family, especially the ones just starting:
   • Self-Education
   • Household appliances, Furniture etc.
   • Vacation
   • Retirement
   • Home Purchase
   • Car/Vehicle purchase
   Before you start to plan for kids, these are the foremost goals you should pay attention to. In brief planning for these goals will require you to define the following for each of them:
   1. Time to achieve the goal
   2. Amount required to provide for the goal
   3. Amount you can invest now to attain the amount in point ‘B’
   Defining some of the goals may be tricky, for example the retirement goal where it will be difficult to imagine an amount that will be able to provide for your post retirement expenses. The trick is to start with something, and go for expert assistance as soon as possible.
7. Budgeting the Household Expenses
   The old but effective method of disciplining your expenses is by budgeting them in advance. Though detailed budget preparation may not be possible for everyone, a simpler method can be followed by dividing the expenses in two parts:
   1. Fixed expenses
   2. Variable expenses
   Fixed expenses are those outflows which are least controllable, for example: House rent, car / home loan EMIs, etc. While variable expenses are those which are mostly in your control, for example: weekend splurge, clothing, furnishing, and other lifestyle expenses. This should provide you ample scope for modification and creatively adjusting those expenses which are somewhat in your hands, by either postponing them or reducing them. A budget in the end provides a direction and framework for your money to flow and not simply be lost in the daily commotion.
8. Saving and Investing
   In the final stage, when you have the amounts available for your expenses and the amount required for goals, your task is to start putting your money through your plan. There is sometimes a gap between what you plan to save and what you can, given the amount of income and expenses. In such situation it is important that some compromise is reached between savings and expenditures, simple reason being – “time will increase money, the penny invested now will become much bigger over time than the money invested in the later years.”
9. Review Your Plan
   Planning so meticulously done can be quite relieving in itself. Though, it doesn’t permit us to abandon it completely for the future. We must return to it on regular basis to account for the changes and monitor the progress. Beware of panic or overconfidence though, when we have plenty of aspirations, a little money can make us dream bigger and lose patience. Remember, “Time will increase the money”.
10. Ask for Help
    It pays to get a professional advice and plan to improve your financial position. If it is already good, then you can strive for greatness in it, if it is great then strive for sustainability of this great financial position. A qualified wealth manger / financial planner can be very effective add on to your planning process, and really add value to your already detailed plan.

Life long Lessons for Investors

Successful investors have a lot to share from their experiences which goes beyond just numbers. Almost every such person would agree that investment success is linked much more to investor behaviour and investment approach more than anything else in investing. It practically has nothing to do with choosing best performing products or market timing but everything to do with how you see and manage things over time. The following are a few of the priceless lessons that successful investors often share with others.

1. Big picture:

You don’t want to look at one little piece of the pie. As an investor, you should always have a big picture in your mind whenever you are assessing your investments. The big picture is looking at your entire net-worth and cash flows. This takes into consideration all your assets and liabilities in mind, plus all your incomes and expenses. It should also take into consideration the risks that you are facing, both physical & monetary, and the protection (or insurance) you have to mitigate such risks. Any big financial decision should be contextual of this big picture.

2. Self Investment:

Self-investment or steps to improve your skills, knowledge and capabilities should always be a life-long pursuit for most of us. Whether you are an entrepreneur, professional or a salaried individual, such an approach and self-development initiatives will enhance your opportunities for the future. Self-development should be on top of your agenda as technology and rapid changes are impacting almost every industry today and will impact your today or tomorrow. If one is ready and takes action keeping such things in mind, the financial future will likely be much more secure.

3. Investment style /strategy:

Every good investor tends to develop his style and strategy over the years. Such a time-tested approach to investment brings more discipline, certainty in investments while removing bias and emotional reactions from decision making. If you are a new investor, we would urge you to learn from the experience of successful investors, personal experience and from financial experts to develop your style and strategy. It is also important that you remain flexible enough to change your ways based on new learnings and guidance from experts. Such an approach to your financials will hold you in good stead in your life.

4. Keep good habits:

Developing good money habits is you should adopt very early on in life. There is a solid reason to develop basic habits of savings, avoiding excessive spending, have patience in financial decisions, living within a budget, avoiding bad debt and so on. The good habits go a very long way in strengthening the roots of your financial well-being over time. Good financial habits are directly responsible for your financial situation today and also for tomorrow.

5. Avoiding big mistakes:

Just as important is to develop good financial habits, it is also important to avoid big financial mistakes in life. Even a single big financial decision gone wrong can ruin a lifetime of wealth created from good decisions and good habits. Hence, big financial decisions must be taken with care, patience and proper assessment. Needless to say, avoiding insurance or under-insurance is one of the big mistakes that people do. Another important mistake would be w.r.t. investments in unregulated investment firms like chit-funds, etc. Real estate investments is another area where decision making has to be proper to avoid long-term net negative impact on your portfolio, keeping in mind the other opportunities available in the market.

6. Be decisive:

A lot many investors lose precious opportunities and time by avoiding decision making in time. Time is of great essence when it comes to investing. Being laid back or delaying your decisions carry a delay-cost for any new investment or even otherwise. Money anywhere is either earning or costing interest/capital gains or is at risk in some form. Being decisive means that you do not let things get delayed and cost you directly or indirectly.

7. Take calculated risks:

Taking risks is one of the virtues appreciated today. There is a change in culture which is encouraging many to take risks in entrepreneurship. As investors, we too should be open to explore ideas and asset classes that offer better risk-return trade-offs in the long-term. Investors should not be too cautious to not take any risks in the portfolio and settle for interest income from traditional investments. Investors could do much better if they focus on real, inflation-adjusted, post-tax returns from their investment choices. A bit of risk for better returns in long-run is essential for wealth creation.

8. True Happiness:

The most important thing in life would be peace and happiness. However, this is not something which is beyond the reach of us and is independent of your financial situation. If you are unhappy with one crore of net-worth, you will still be unhappy with even a hundred crore of net-worth. One has no reason to be unhappy on the financial front if life's basic requirements like home, livelihood and financial goals like retirement, education & marriage for a child, etc have been adequately addressed /planned for with reasonable expectations. True happiness, beyond this level, is thus a state of mind and very subjective. Happiness beyond this would come from things like a loving family, good health, sharing, charity and having a good social standing. Focus on these things too to enjoy peace and true happiness beyond money.

Investing Obstacles to Conquer:

The beauty lies in the eyes of the beholder. The measure of anyone's personal or financial success is also a very subjective term. Similarly, the obstacles on the journey to financial success also differ from person to person. What may be challenging for one person may not seem so for the other person. In this article, we will talk about the common obstacles that keep you away from being a successful investor and from fully realising your financial goals.

Getting driven by emotions:

There are many emotions at play when it comes to money. The most prominent and commonly observed emotions are greed, herd mentality, fear, overconfidence, biases and ego. Each of these emotions may play a role in decision making and force you subconsciously to make bad financial decisions. Let us see how.

Greed drives a person to make decisions anticipating quick money. Unfortunately, such things often end up burning your money. Herd mentality is where you follow the market or others even though logic may point you to go in another direction. Fear is where you are trapped in a negative mindset and believe that the worst is yet to come when the markets are going through a bad phase. You will likely give up when things are going bad when in fact, an opposite action may be required. Overconfidence is where you believe that your understanding or knowledge is superior to others and you are 'right'. With overconfidence, you may not listen to sane advice or be open to contradictory info. Biasness is where you establish an emotional bond with any particular investment or product either positively or negatively. This positive or negative emotion will not let you evaluate any investment objectively and you may end up taking biased decisions. Ego is where you take a stand to protect your word and not accept any mistake or failure on your part. Ego in financial matters may even force you to take decisions which are clearly risky.

Over-monitoring your equity investments:

Financial assets and investments are perhaps the only long term investment which we tend to measure almost on a daily basis. We never measure the value of our property or the second home we bought. We never evaluate the value of jewellery or gold we have saved for our daughter. We even do not care to see the value of almost every traditional investment product like bank fixed deposit, ULIP policy, PPF, NSC, NPS, etc. The only thing we are interested in knowing on a daily basis is the value of your equity portfolio, irrespective of how much share it has in your total portfolio. Why are we doing that?

Your equity investments, especially those in mutual fund equity schemes are your long term investment assets. It would be just ok if you looked at their value – say on a monthly frequency. The evaluation of the portfolio should be done on a yearly basis or half-yearly basis at most. Over monitoring your portfolio will force you to see short term performance which may not be the right thing to do. It will also only increase your anxiety and give needless stress to you.

Being unclear about your goals:

For any target to be achieved, you need a plan. Without a plan, a goal, nothing worthwhile can be achieved. An average person's life can be seen as a long list of personal and financial goals. On this list are things like the purchase of a car, home, child's tuition and education fees, marriage planning, holidays, second home, retirement kitty, starting a business, and so on. However, we have limited resources in our hands in the form of our salary or business income.

The need to define goals can never be underestimated. The big mistake that people do is to not really plan for their financial goals and the primary obstacle to achieving the same.

Ignoring real financial problems:

There are many around us who are earning well but often find very little money to save. There are also many others who have loan EMIs almost equal to their income. We often find that people in their early career having much more expensive mobile phones compared to their bosses! But there are also others who may not look to be rich but still have quietly built properties and amassed wealth slowly over time. The conclusion is that it is not really about how much you earn but about how you manage your finances that will decide how much you will save. Spending behaviour, your lifestyle, tax and insurance planning, investment planning, debt management, etc will together decide how much wealth you will create. Ignoring the fact that you are not going through any financial challenges is an obstacle to achieving investing success.

Over-emphasising certain risks:

Many investors see only one type of risk – the risk of investing in equity asset class. True, an equity asset class does carry some risks. However, there is a risk in virtually everything. The biggest risk is of inflation – the risk of losing the real value of money. If we are too careful with our money for far too long, that is a perfect recipe for wealth destruction. Compare between two child – one who is allowed to play, go out, take risks and make mistakes and one who is overprotected and not allowed to even go out. Which child do you think will be more successful? Similarly, with wealth too, we need to give it some space, diversification and risks in order to grow. We must realise that the traditional saving avenues, bank deposits, etc. do carry some unseen risks, especially in the long term. This may perhaps far out-weigh the visible risks of investing in equities through mutual funds.

Conclusion:

The obstacles to successful investing and enjoying financial well-being has a lot to do with how we think, feel, react and behave with our money. Self-introspection within ourselves will perhaps unravel much more insights and challenges or obstacles than we could ever imagine. Realising and accepting these obstacles would be the first step towards ensuring investing success and also financial well-being in our lives.