7 ways to make the best use of a dual Income!

After you get married, you not only share life with your spouse but your income and expenses too! The biggest challenge that most young earning couples face is to manage their finances. Here are some of the best post-nuptial financial planning tips that every couple should consider using.

 

It is essential to have a short term, medium and long term financial plans that can be used as a yardstick for measuring your financial success. It also keeps a tab of the road map you have set for achieving your joint goals. These goals may be further categorized into needs and wants to mark their importance.

1. Debt Free Living: The main issue that most young couples deal with is debt. Whether it is a credit card, personal loan, home loan, education or the car loan, the first priority should be to pay it off. Paying off the debt earlier than scheduled relieves you of mental anxiety, can save you on hefty interest that you pay to the financier over a period and also makes you cash rich. As per RBI’s instructions, banks are not charging pre-payment penalty on floating rate home loans. This gives freedom to the borrower to prepay their loans.

 

Let’s look into a scenario wherein you have availed multiple loans like home loan, car loan, credit card loan etc. In this situation, we suggest you an action plan to on how to pay down your debt:

Let’s look into a scenario wherein you have availed multiple loans like home loan, car loan, credit card loan etc. In this situation, we suggest you an action plan to on how to pay down your debt:

 

a) Make a Budget: The budgeting has to be proper and more importantly, realistic. The surplus has to be saved or invested towards your goals. Ideally, try to be slightly strict with yourself. Among your expenses, you must be prepared to make viable cuts that you can stick with in order to make a difference to the overall state of your finances.

 

b) Choose which debt to pay first: Debt management experts advise paying off the loans with higher interest rate first. This is called the debt ladder or the ladder method of debt repayment.

 

Third Party insurance: Since you have worked hard to build a solid financial footing for you and your family, you want to be sure that everything is protected. Accidents and disasters can and do happen, and if you are not adequately insured, it could ruin you financially. You need insurance to protect your life, your ability to earn income, and to keep a roof over your head. It offers peace of mind, security and a safety net. Having insurance policies in place is extremely important for every couple. Here are some that you should consider investing in:

The other option allows you to pay down debt starting with the smaller principal balances, which will quickly free up money to put toward other loans with larger principal balances. This is called the reverse ladder or the snowball method, because you build momentum and confidence as you pay down debt.

 

Review your finances thoroughly, crunch the numbers, and see which method would be the most effective for your situation. The rule of thumb is, you must prepay something each month to get rid of the debt as soon as possible.

[Source: https://blog.bankbazaar.com/7-ways-to-make-the-best-use-of-a-dual-income/]