3 financial steps young couples must take

While young couples pay a lot of attention to managing their new lives together after marriage, the financial aspects sometimes get pushed aside, albeit temporarily. But delaying financial planning can come back to bite later.

They think they are young and still have time to get their finances in order. But that's not true.

Personal finance decisions relating to expense management, saving and investing are best made jointly and at an early stage.

Here are three steps, which if followed, can help young couples manage their finances better:

1. Discuss your goals

Most personal finance problems arise when spouses don't talk to each other about individual or common goals and plans to achieve them. Lifestyle choices of both the partners can be different. As resources are often limited, it is a good idea to discuss each other's aspirations and set priorities for common goals. For example, one of the spouses may want a big house while the other one can settle for a smaller house but stresses on spending annually on vacations abroad. By talking to each other, couples can arrive at a consensus for common goals.

Like all other aspects of marriage, finances are best handled when the husband-wife duo work as a team and consult each other. Any major spending decision above a certain limit (say ten percent of total expenses) should be taken jointly.
 
2. Manage your spending

a) Budget your expenses

Track where your money goes by maintaining a list of monthly expenses and budget the same. Limit your non-committed expenses like dining out and entertainment to less than twenty per cent of your total expenses.
 
b) Manage your debt

Young couples with double income streams raise debt as they are comfortable managing it at the current stage. However, in future scenarios like the arrival of a baby or one partner taking a break from work, can impact debt re-payment. When debt re-payment is affected, young couples tend to fall in to the debt trap and raise further loans to pay the current debt.  Before raising debt, know its impact on your future cash flows.
 
3. Protecting your future through savings

Young couples managing their joint finances for the first time often give least importance to savings. In comparison to later stages of life, the disposable income in initial years of marriage is higher. Later on expenses only tend to increase with events like your first house and children. Even if the income is not much in the early years of marriage, savings should not be placed on a back burner. Regular small savings will add up and protect you on a rainy day.

a) Saving regularly attracts the power of compounding returns. The value of your savings will increase with time.  

b) Save for emergencies by pushing some amount in liquid assets. This will act as self- insurance and protect your earnings during contingencies.

c) Buy a health cover to fund medical expenses and hospital bills.

d) Plan to save in a diversified portfolio and adjust the allocation with the passage of time to suit the change in risk appetite.

Early bird catches the worm

Marriages work better when personal finances are in order. As the saying goes 'early bird catches the worm'. Newlyweds or couples considering getting married should consider planning their finances early.

ArthaYantra is an integrated online personal finance company.
Disclaimer: The opinions expressed in this article are the personal views of the author. NDTV Profit is not responsible for the accuracy, completeness, suitability, or validity of any information on this article.