Financial Preparations To Consider Before Getting Married

Financial Preparations To Consider Before Getting Married

For the romantics out there, you should know one thing, preparing for a wedding and a marriage are two entirely different things.

Marriage will change your financial situation and it will have an enormous effect on all aspects of your life as a couple. Everything from personal financial goals to credit card debts will bring new challenges. The wedding is just a one-day thing and a one-off cost. You would need to have a plan for the days, months, and years after you say “I do.” What’s after that lavish wedding ceremony? Do you have your housing figured out? How about the education plans of your future children? Health insurance? Retirement?

The road to happily ever after requires a considerable amount of financial planning, and preparing for your wedding is just the start of this life long journey. To those pondering these thoughts, here are the things that you should be preparing for before tying the knot!

Wedding expenses

Walking down the aisle to finally exchange vows doesn’t come cheap!

Here’s a quick breakdown of the expenses:

Wedding ceremony₱5,000 to ₱20,000
Reception venue₱17,000 to ₱120,000
Catering services (for 150 guests)₱50,000 to ₱160,000
Wedding rings₱15,000 to ₱50,000
Attire₱20,000 to ₱50,000
Photo & video services₱70,000 to ₱150,000
Other expenses (souvenir, host, entertainment, invitation, etc.) ₱15,000 to ₱50,000
Total₱192,000 to ₱600,000
source: numbeo.com

The wedding is just the beginning of a couple’s journey together. Most couple tend to put a lot of  emphasis on their wedding spending but fail to plan for their life after that. Although you should plan for your wedding expenses in advance so you do not incur any debts, it is equally important to also plan for your future together as a married couple.

Sketching your financial future

Do you want to buy a new house, a family car, or have a child in the future? Discuss your goals and your financial capacity to achieve them. You don’t need to have a fortune before getting married to do this.Simply make sure that you have the following sorted out.

Health insurance

From common sickness to pregnancy and delivery, having health insurance in place will surely give you peace of mind for yourself and your family.  While health insurance policies provided by private companies during an employment will provide your family a good health insurance policy, its coverage however will only be as long as your employment. If you leave your employment in bad health, you may risk not being able to get a personal insurance later on. Thus, it’s practical to also get own health insurance policy for your family.  

You don’t need to spend a lot to purchase a health insurance policy for your family.  A number of health insurance products, for example, Medicard offer ₱700,000 worth of benefit for just ₱5,578 monthly premium.

Housing loan

One of the must-haves for a married couple is a place that they could call their home. Before getting married, consider the cost of moving in together, that includes buying a house! Your easiest route is housing loans, either by bank or through Pag-IBIG.

Pag-IBIG housing loan is quite easy to apply for, but the coverage isn’t as comprehensive as a bank loan. Also, Pag-IBIG loans are not accepted by all developers, limiting your options when it comes to choosing a house. On the other hand, bank loans  allows wider options, but the requirements for approval are a lot more stringent than Pag-IBIG.

Pag-IBIGBanks
QualificationsMust be a member, and must have 24 monthly contributions to qualify. Members can pay 24 months in a lump sum.
Not more than 65 years old
No existing multi-purpose loan in arrears
No other Pag-IBIG housing loan that had been foreclosed, cancelled or bought back
No membership, contributions, or savings account required
Must be a Filipino citizen, or have a Visa requirement for foreigners
Must have a monthly family income of ₱40,000
Must have a stable source of income, stayed at least 2 years in the current company or have 3 years of profitable operation if running a business or practising profession
Requirements1. Pag Ibig Housing Loan Application Form

2. Membership Status Verification Slip

3. TCT/CCT in the name of the borrower

4. Photocopy of the New Tax Declaration

5. The Collection Servicing Agreement or Post-dated checks

6. Proof of billing address

7. Notarized Loan and Mortgage Agreement

8. Notarized Promissory Note

9. Disclosure Statement on Loan Transaction

10. Occupancy Permit (if applicable)

11. Building Plans (if applicable)

12. Deed of Absolute Sale (if applicable)
1. Application form

2. Photocopy of government-issued ID with photo & signature

3. Marriage contract if applicable

4. Alien Certificate of Registration for foreigners

5. ITR for employees

6. Last 3 months of payslips or Certificate of employment for employees

7. Business Registration Papers for businessmen

8. Financial Statements for businessmen

9. Bank Statements for businessmen

10. Trade References for businessmen

11. Lease Contracts or copy of Title for businessmen

12. Photocopy of TCT/CCT

13. Building plan with vicinity map

14. Master of Deed of Declaration of Restrictions for condominiums

15. Building plan for construction

16. Bill of materials and Labor Cost

17. Statement of Account for Refinancing
CoverageCan be used to purchase a lot not exceeding 1,000 sq. meters
Can be used to purchase town house or condominium
Can be used to complete construction
Refinancing
Can be used to purchase a town house and condominium unit
Can be used to finance housing construction
Can apply for re-financing
Also offer home equity service
Amount you can borrowMaximum of ₱6,000,000
Subject to other qualifiers like the actual need of the member, capacity to pay
Some banks offer a minimum of ₱300,000.00 some offer minimum of ₱500,000
TenureMaximum of 30 years5 – 35 years
Interest rates6.99% for the first three years, subject to re-pricing up to 11.375% (30 years)Some banks offer as low as 5.50% for the first year, subject to re-pricing
Some banks offer a fixed rate of 6% to 7.5% for the first 5 years, also subject to re-pricing

Emergency fund

Money issues are often a source of stress in any relationship, and when financial problems arise, couples should be mature enough to work together in finding a solution. It may be a sensitive topic, but it’s something that a couple will have to deal with together. Having an emergency fund will make it easier for a married couple to get by a financial crisis without having to stress over  finding the funds that they need.

The universally accepted rule is that you should have at the very least, about three months’ worth of funds in your savings account to survive losing your job or a business bust. However, if you really want to take the proverbial marriage plunge, then you should have at least a year’s worth, just to be ready for any eventuality.

How to prepare financially ?

You don’t really need to have millions in your bank account in order to get by the early stages in your family life. However, as a couple, you must have achieved these financial milestones in order to say that you are really ready.

Financial maturity

As a couple, you don’t need to be independently wealthy to be financially mature, you just need to be open and willing to talk to each other about money. Money issues are often a source of stress in any relationship, and when financial problems arise, couples should be mature enough to work together in finding a solution.

Make sure you don’t sweep money issues under the rug. Be frank about your money values and aspirations. Try to reach a middle ground and don’t try to force your significant other to adapt your money values or vice-versa. Both of you should be willing to lay down your cards on the table because this will help you avoid a whole lot of arguments and disagreements in the future.

Stable source of income

Where you are at in your career is one of the most important factors to consider before getting married. Having a regular income, either through employment or through a business will directly impact the stability of your cash flow.

As a couple, determine where your income streams will come from, whether it be from investments or other sources. It is important to map out how much you will need to make as a couple to sustain your individual lifestyles after the wedding.

Be advised that if you’re planning on having at least two kids and you are aspiring to provide them with a “simple and comfortable life” in which you can afford to buy a car and a medium-sized house, send them to college, regularly spend leisure time with family and friends and take occasional trips around the country; then you would need a gross monthly income of at least ₱120,000, according to the National Economic and Development Authority (NEDA). And, that’s based on 2015 prices.

Clean financial slate

Always try to remember that being financially ready for marriage is more than just having the capacity to pay for the wedding. Your future together  should count a lot more.

Bringing the baggage of debt into a marriage can be a major stressor on a couple. It would be best to zero out all your debts before marriage because you will have a harder time repaying all your liabilities as more and more expenses come in. If that is not possible, as in the case of a long term housing or car loan, then you and your partner should make sure that your debt is manageable and focus on establishing a debt reduction plan to deal with it as quickly as possible. Because when you start living together under the same roof as husband and wife, your debts will become a problem for you both.

Plan ahead

Assess your current financial status and create a financial plan. At a basic level, complete a net worth statement and review your recent expenses. After that, create a spending plan so you can start placing your money where you want it to go in advance. The plan should include savings, debt payments, and emergency savings.

How you handle money and your knowledge about money matter. Do you have a written financial plan? If your answer is no, then start creating one.

 

Once you have that in order and come to the realization that you have a good amount of funds available for investment, then it is time to acquire assets while you and your partner are both still single since your individual responsibilities are still minimal. Get that pre-selling property you like, invest in mutual funds or blue chip stocks, and start on that retirement fund. Set specific goals and action plans. Always remember that improving your financial security and stability before being joined in matrimony will help you both in the long run.

Image from tickera.com and vasandiegostudio.com

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