Only a few months to go before the wedding season begins to heat up. By this time, I can imagine a lot of prospective brides and grooms starting to feel that white-hot feeling of panic as expenses start coming in and as the reality of the entire things sinks in.
A lot of marriages are destroyed by poor financial management, so this is not the time to enter that holy agreement all wide-eyed and unprepared. Love can do a lot of things to finances – both good and bad.
Reader Jay, for example, emailed us asking for advice on how to make his money grow more. He intends to get married and settle down in the Philippines in two years. Jay says he understands the concept of high risk/high return, and wonders what options are available after deposits, stocks and mutual funds.
Let me pick up this portion of Noet Ravalo’s advice:
The cash flow requirements of a single person and a married person are worlds apart. This is not just a minor tweak here and there of your portfolio. In my view, providing for yourself, your wife and your children not only changes the pressures on your finances, but also changes the priorities and the dynamics of your investments.
Read the rest here:
I think this is one of those things that we all know, but somehow cannot wrap our minds around unless someone really drums it into us. You know, those moments when something so obvious only becomes clear at a certain defining moment.
Once you put that ring on her finger, boy your life is surely going to change and finances had better be one of the first things couples should adjust.
Noet advised Jay, who has a P5 million portfolio in deposits, stocks and mutual funds to consider lending his existing securities to other parties over short periods – although he stresses out that Jay should completely understand first the risks and returns of this option and get a professional to advise him.
Noet also recommended bonds and structured notes. I notice that these days, people are hardly looking at bonds – stocks are the current darling of the market. However, no run-up in the stock market will continue forever. If you are talking about long-term finance, definitely, well-picked bonds should be part of a good portfolio.
Buy bonds through banks, but don’t ask your average teller. Get in touch with private banking groups, asset management departments, and trust departments. The government claims that its small-denominated bonds should allow small investors to put in a minimum of P5,000 in bonds, but sorry to say that this has not really happened. So be prepared to plunk in much, much more than P5,000.
April 30th, 2007 at 3:45 pm
Hi Salve I think I meant “dream wedding” burning a big hole in your pocket, and it seems more important to some people than to others
But building married life on firm, financial foundations should still be a priority.
April 30th, 2007 at 10:32 am
hi nina and don2x, most people think a pre-nup is only for the wealthy. in practice, that’s also true.
There have been changes in the Family Code since 1998 that make prenups increasingly attractive to more people. Check out my article “When love means having to say ‘This is mine’
http://money.inquirer.net/personalfinance/view_personalfinance.php?yyyy=2005&mon=06&dd=16&file=1
In that article, SGV explained that the new family code now allows husbands and wives to own whatever their spouses own even before the marriage. To me, the biggest repercussion of this change would be felt by those who have children in a previous marriage. Tip for those who are considering a prenup: get it if you want to make sure the children feel confident that they will not be eased out of an inheritance.
April 30th, 2007 at 9:09 am
nina, i agree with you about weddings. They are emotional events, that’s why it is hard to stay within the budget =). My tip for those who are planning to get married. Trim the guest list. All the other expenses are dependent on how long or short that guest list is. I really went to the extreme on this one: each person on the list had to mean very much to my hubby and I. No one was there for political or business reasons, or people you want to prove something to. Result: a wedding that’s very meaningful because you won’t see a face that will make you nervous, insecure or tense.
April 30th, 2007 at 8:55 am
chip, I agree. Rates have no way to go but up because its almost ready to bump into inflation. The government won’t allow interest rates to fall below inflation rates, that’s for sure.
April 30th, 2007 at 8:52 am
hi pinoy investor, thanks for dropping by. I agree with you about starting a business. But definitely, this is not for those who are weak at heart. I love the way you said it “start small, think big, try things out, learn from mistakes…”
April 30th, 2007 at 8:52 am
hi hachiko, just a note. Dream marriages don’t exist =). Realistic marriages — especially finance-wise — are better than “dream marriages” hehe.
April 27th, 2007 at 4:29 pm
@don2x
Exactly! That is also my comment in the other post about having last will. Pre-nup is important. Some people do not appreciate it and even get offended by the idea.
April 26th, 2007 at 9:26 pm
some do not take any chances by having pre-nuptial agreement. till debt do us part?!?
April 26th, 2007 at 8:44 pm
My only advise to those who plan to get married: Do not splurge on your wedding, set a budget and stay within the budget. Wedding can be very very expensive!
April 26th, 2007 at 5:40 pm
If you are going to buy bonds, there are two general classes of government bonds: 1) T-bills/T-notes 2) Retail Treasury Bonds.
You can buy RTBs at 5,000. The problem is, there isn’t much supply of it. I remember that there was an issue of an RTB that wasn’t very well subscribed last year. You might want to check your bank if they are still available.
The more regular T-bill or T-notes are more plentiful although they pay very low interest rates now.
If you are purchasing peso-denominated bonds, then I suggest going with the shorter maturities such as the 90 and 180-day bonds. Interest rates have nowhere to go but up in the current low-interest environment. When you are invested in short term bonds, it will allow you to shift to higher interest bearing bonds once interest rates move up.
The right department to contact is the Securities Department of your bank. Banks will usually require a purchase of at least PhP100,000 for T-bills/T-bonds.
April 25th, 2007 at 8:49 pm
[...] Money Smarts : What love can do to your finances [...]
April 25th, 2007 at 5:16 pm
Jay,
The best advice I can give you is don’t marry. Look at me, if not for the wife and 3 kids, I would have been retired comfortably by now. But bec. of love, I can’t retire yet. That’s ok, 38 is too young to retire anyway.
Seriously, if you have the stomach for high risk and high return, start a business. Start small, think big, try things out, learn from mistakes, replicate the successes in bigger scale, don’t give up, get rich or die trying.
If you’re not a risk taker, just invest in professionally managed funds. That’s safer, less exciting and less return. But you won’t get too far with 5M. You have to find a job to support the family.
Cheers!
April 25th, 2007 at 4:31 pm
Nice intro Salve! Salud, dinero y amor ought to complement each other in life. But then again, how true, money issues is one of the many tests a couple must pass. Ergo we have moneysmarts!
Do you know the #1 comment from fans after getting my TV talent fee? “WOW, pwede ka nang mag-asawa!”. No kidding, and it’s usually from the manangs! To which I replied once: “It doesn’t cost that much sa munisipyo, di ba?” tee hee hee.
oooh boy, love and that dream marriage can burn a deep hole in the pocket indeed.
PS. #2 comment was “wow pwede ka nang mamili ng kotse!”