Money tips for young couples

Expenditure

House rent: Rs 4,500 per month (this will increase to Rs 10,000 as we are moving into a bigger home)

Education loan: Rs 7,000 per month (for my husband)

Car EMI: Rs 6,000 (planning to buy one)

Eating out: Rs 2,000 to Rs 3,000 per month

I earn more than my husband and he is very reluctant to save. I earn Rs 30,000 a month and he, Rs 24,000. Moreover, we are planning to send Rs 10,000 every month to his parents.

How can I invest for the long term as well as keep some money for emergency?

- Anita S

Dear Anita,

Your question is on how to invest for the long term. But I see your quandary as less of where to invest and more of how to save.

The monthly outflows mentioned by you add up to Rs 37,000 per month. Your other expenses like annual holidays, medical and other household expenses might easily add up to Rs 10,000 to Rs 15,000 per month.

At this point, it may be more important that both of you, as a couple, save up.

If your husband prefers not to save, use his salary for the expenses first, so your money would be available.

If he is not allowing you to save as well, then both of you need to sort this out.

It is important for you to carry his conviction, else your savings and investment plan might not be sustainable.

• The road to financial fitness

I have a query and can't seem to get things sorted out by myself.

I recently got married. My husband earns Rs 16,000 per month and I earn Rs 7,000.

We are buying a house for which we plan to take a loan of Rs 12 lakh (Rs 1.2 million).

After we take the loan, the monthly outgoings would be:

Equated Monthly Installment: Rs 10,000

Maintenance: Rs 1,500

Private chit fund: Rs 4,500 (this will continue for 14 months only)

We have Rs 1,00,000 in cash. What should we do with this amount? Should we use it towards the home or keep it as an investment?

I have a life insurance cover for Rs 1,00,000 which matures in 15 years. My husband is not insured.

How must I start saving?

- Mamata Thakur

In addition to your monthly outgoings of Rs 16,000 listed above, you will also have your monthly expenses, which might leave you crowded out to save money.

It is important for you to find out if your home loan company is covering you and your husband's life for the period of the loan. If they aren't, you should consider buying pure term cover for that.

Do understand that pure term cover does not return any money if you and your husband outlive the policy period. But, it will cost you very little. For instance, a Rs 10 lakh (Rs 1 million) cover for 20 years for a 35-year old might come for under Rs 500 per month.

The cover will, however, protect the surviving spouse from an increased loan repayment burden.

To find out more on the subject, read Have a home loan? Insure it.

Secondly, while it appears most sensible to utilise your resources to pay off the loan, you need to start investing a fixed sum every month to get into the habit of saving, which is so critical at this age.

A Post Office Recurring Deposit scheme may work well for you. How about putting away 10% of your total income every month?

Illustration: Dominic Xavier

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