When it comes to finances, there are some issues, in particular, that most commonly doom a relationship.
At the height of wedding season, no one wants to think about divorce.
However, some trouble starts early — especially when it comes to money.
According to a survey, 41% of gen xers and 29% of boomers said their marriages ended due to disagreements about money.
For newlyweds and long-term twosomes, it is vital for couples to have those hard conversations and align on money matters early on in their relationship in order to avoid any challenges relating to finance.
Lee Hancox, Head of Channel and Segment Marketing at Sanlam, says, “When you’re in a committed relationship and planning a future together, it’s important to have ‘the money talk’, understand each other’s money personalities and backgrounds, and get onto the same page with spending habits.”
According to Lee, here are some of the biggest money marriage mistakes – and how to overcome them:
What’s yours is mine: When couples commit, there’s often an assumption that assets will be shared. It is best to be upfront and disclose what each person has and how the asset will be treated – whether it’s property, investments, etc.
Important key notes that Lee states for couples to examine is to ask each other these questions: Will the property be transferred into both parties’ names, with one partner contributing towards it or both, will it stay one person’s asset?
Will you have separate bank accounts? How will you divide the household expenses? When your partner opts to keep his or her finances separate, this does not mean they don’t trust you as their partner, however, it simply means that it could be a matter relating to tax purpose so it is best to keep your emotions in tack, Lee advised.
Big spender: In relationships there is always one that spends more than the other and the difference in personalities could cause a strife. Due to our background, views on life or previous relationships all impact behavioural patterns. Lee advises that couples should help one another learn healthier ways to be more financially savvy. “It’s about acknowledging the habits that aren’t serving you or your relationship, and committing to consciously work on these, individually and together,” said Lee.
Anything you can earn, I can earn better: Financial power plays a huge role in relationships and can therefore be detrimental. In reality one person will earn more than the other. Figuring out how to navigate this is critical. However, being honest with one another and recognising you’re one team, with shared goals to work towards, will help you both strive in finance as a couple.
Honesty: Money secrets can put stress on a relationship. If you’re hiding receipts – investments, assets, debts or spending – from your partner. It’s best to be open and transparent about any debt.
Assess the impact on your monthly cashflow and put a plan in place to repay it as quickly as possible. Acknowledge what caused the debt and, if necessary, commit to changing the behaviour behind it.
Share it like it is: Many people enter relationships with existing money responsibilities – either to their parents and extended families, or possibly maintenance to a previous partner and children. It’s best to try and find ways to channel energy into finding solutions together to secure the best future for everyone.
Determine the needs of all your dependents and then look at how to finance these. Avoid using your retirement savings to do this.
The kid question: Children change everything, so it is important to be on the same page. Discuss how many children you want, and what kind of lifestyle and education you aspire to give them. Do you both want to continue working or does one partner prefer to take a career break? Is this possible and are both partners on board? How will you save for schooling? Public or private schools? What about tertiary education? A financial planner can help you come up with a viable plan.
Future plans: Being future-focused can bring a couple closer together. That means thinking about and preparing for retirement together, early on. What does it look like and are you aligned? Are you both contributing toward it? If one partner passes away, is the other partner provided for, in terms of estate planning? If you have children, is their education and living expenses provided for? What if you both pass away at the same time? Speak to a trusted financial planner for guidance and adapt these plans as ‘life happens.’
Also see: Expert advice: How to become a minister of your finances
