Money tips for couples by Sonia du Plessis, Financial Advisor, Brenthurst Wealth
“They say that love is more important than money, have you ever tried paying your bills with a hug?” – Nishan Panwar
Few other issues cause as much strain on relationships as money. As the marketing frenzy around Valentine’s day builds up, no better time to think about how to make sure money issues do not cloud this romantic date, or your relationship.
- Attitude towards money
Accept that not everyone has the same view about money. Some people are super careful, budget for everything, think twice before making a large purchase or getting into debt for say a car while others view money as a resource to secure a fun and entertaining life. In a relationship it can cause great strain if one person is a spendthrift and the other a miser. As with all relationship matters, key to manage this is communication. Agree to disagree then make a plan about how to approach the different attitudes.
- One person earns way more than the other
For some this can make them feel inferior in a relationship and almost dependent on the other person. Nothing could be further from the truth.
Just because your income accounts for a smaller percentage of the household finances doesn’t mean that your role in the relationship is smaller. This comes up a lot when, for instance, one person decides to stay home to take care of children. Contribution to a household cannot be measured by income alone. Remember that if one person for some or the other reason earns less than his/her partner, that you as a “household” should still make provision for both parties, this includes looking at for example life cover and retirement planning for both parties. The key is to always ensure that both parties’ financial affairs are in order.
Also don’t fall into the trap of accumulating assets only in the one person`s name, which often happens when the one person earns more than his/her partner. Tax wise, it makes sense to split assets. From an estate point of view it is also better to accumulate assets in both names. Last thing you want is upon the death of the one person that the surviving person battles to pay the bills the first a couple of months while the estate of his/her partner is being wound up.
- Things to consider before getting married
Do not over plan a spectacular wedding day, make time to think about your life together. As far as money is concerned, best to talk about it before the special day. Get a prenuptial agreement in place that sets out the starting line for your money life together, and will manage it when things go south.
Decide on a budget for joint finances. Who will pay for what. Also discuss whether there will be a joint account for all shared expenses or a 50/50 payment situation. If a property is only registered in one name but both people contribute to paying for a property (not only the bond but running costs as well), this will affect the joint money situation. Not discussing this before getting married is a sure recipe for conflict once the honeymoon is over.
- Adapt the plan
Relationships do no stay the same forever. While married one person may decide to stop working to pursue a passion, which will immediately affect the joint finances. Or when children are born the household spend will most likely change completely. Plan for it, amend the budget and as with all other issues, communicate. Try and establish a habit to talk about your financial affairs at least once a year and then go visit your financial planner annually to amend your financial plan, if needs be.
- Last Will and Testament
Don’t forget to keep a Last Will and Testament up to date. So important that both parties have a Will and if you have small children a Last Will and Testament is non-negotiable, it is extremely important. Do not postpone this thinking you are still young and it can wait. Be prepared always.
- Include savings and investment in the budget conversation
A household budget should not only focus on spending. Saving and investment must be an important item on the budget discussion agenda. Life policies, savings plans for children’s education and also for extravagant holidays and most importantly retirement savings must be planned for at all times. Considering the much longer lifespan expected for most individuals retirement savings must be more than what we are all used to put aside for this.
In short – budget and communicate. The summary for a happy life together.