Getting your financial plan in order takes away a great deal of stress in a relationship, so it’s advisable to do it before entering into a marriage.
It’s easy to get carried away by the whirlwind that often follows falling in love – proposals, weddings, celebrations – but the reality is that the person you marry is rarely the same person you may have to divorce. And while it’s great to hope for the best, dynamics in relationships do change and we should be mindful of this.
Kabelo Makeke, Head of Customer Financial Solutions, Personal Banking at Standard Bank, shares 13 tips to assist in keeping your finances as a couple in perfect order:
- Good money management starts with a good marriage contract. Marrying in community of property might seem fine at the start, particularly if neither of you has much money to begin with, but it’s a little like putting all your eggs in one basket. For example, if your spouse owns a business and falls into debt, your own credit record will be affected and you won’t be able to act as a safety net for him/ her.
- You must both try to agree that, whatever happens, your savings plan comes first. Don’t get too distracted by the day-to-day struggle of living and lose focus. First step is to figure out the big picture: when do you want to be financially independent? How much money do you need for retirement? What portion of the children’s education do you want to cover?
- Work on the numbers to determine how much you’ll need to set aside each month to reach those goals. Finally, set up automatic monthly savings into retirement plans. If you save on a debit order you soon forget that the money is even there, because you become used to living without it.
- Keep separate current accounts and credit cards. Don’t accept responsibility for someone else’s overspending.
- Early into the relationship, find out how much debt you will have together. This must be handled with complete honesty, or this could lead to financial complications further on in the marriage.
- Both parties should consider having a retirement fund. One salary is not usually enough to support two people when it comes to retirement and having resources built up could assist in the event of separation.
- If you are both earning a salary it should be agreed upfront who is going to pay for what. This can be a sensitive topic, so it would be advisable to split everything from retirement savings to expenses on a proportional basis.
- Money that comes in as a windfall or bonus should be divided into the respective savings plans or put towards debt repayment, such as your bond.
- Consider having both parties’ names on the bond registration papers.
- It would be advisable for each of the parties to receive a bit of ‘pocket money’. It doesn’t have to be a lot and the amount doesn’t even have to be fixed – but even a couple of hundred rand a month will give each of you a little freedom.
- If there are differences between the two parties when it comes to spending and one is more conservative than the other, try to reach a common ground. If one partner manages the family finances, the other should assist and get involved so that he/she gets an idea of how much it costs to run the household.
- If the one partner is reluctant to divulge information, the other should try to be assertive as they have a right to know. If they still withdraws the information, then the other party should consider contacting their broker to get the information. A person’s reluctance to discuss the situation may mean that he/she has not done a very good job at managing the finances and a way of confronting the situation would be to talk about the situation and explain that it’s not an attempt to make him/her feel inadequate, but to assist in getting things on track. Both parties need to be open and transparent when it comes to the family’s finances.
- If reaching an agreement proves to still be a challenge, it may help to get an unbiased second opinion. This can be achieved by finding a certified financial planner and asking them to help define the goals and laying out a strategy to meet them. They can also point out problem areas and mediate solutions.
“Ideally, people should start planning for their own financial future from the day they start earning a salary. Marriage should never take away a person’s financial independence, but assist in building a stronger financial situation together, empowering both parties,” concludes Kabelo.
