It’s National Marriage Week. Marchelle Abrahams speaks to experts on how to start on the right foot.
SA Marriage Week is an awareness campaign to remind couples of the necessity of a healthy marriage. But amid the technicoloured romance and making memories together, there’s a dead space - it all comes down to money.
A clear understanding of each other’s goals and approach to finances is arguably one of the key factors in staying together.
If you’re planning on tying the knot, it’s important to plan for the future. We asked a few experts for tips to start off on the right foot.
Let’s talk about it
Everyone is nervous to talk about money, but the repercussions for a relationship if you don't are more dire, says Franklin Templeton’s Jo-Anne Bailey.
The qualified lawyer with more than 20 years experience in financial services says it is fair to ask your partner about how much they earn: “Yes, people get defensive and you have to respect their independence and right to privacy. The key is to approach it from the right angle so that they receive it constructively.”
Over the years, Bailey has observed with many of her clients that talking opening about money is still taboo.
She says, “As a society, we’ve mature around a lot of subjects, but in financial matters we’ve made little progress. Talking about it gives you freedom, and it’s liberating to know the facts.”
Don’t be tempted
The mistake that most newly-weds make is to take out a loan or apply for a credit card to manage some breathing space after splashing out on the wedding. Just don’t!
This would only ensure that you start your marriage in a weak position, and if you are married in community of property, your debt is your partner’s debt.
“If we focus only on the impact on our immediate monthly finances, then it does look like buying on credit is the more affordable option,” adds Andrew Davison, head of investment consulting at Old Mutual Corporate Consultants.
“However, if we take a step back and consider the impact on our finances over the full period of the loan we’re taking out, then a different picture emerges and it becomes very obvious just how expensive debt can be.”
Save for the big ticket items
“Everybody must remember marriage starts the day after the wedding,” says Bailey. “Think long term and ask yourself important questions like: What would make me happier? Broke, or money in the bank?”
It all comes down to planning; couples need to be clever and prudent.
The first year of marriage is the building block for providing financial security like purchasing your first home together as a couple.
A financial adviser could be useful for this very reason. “They will be able to give you good advice and build a plan that reflects the reality of your financial situation and your future goals.”
Know your credit score
When it comes to buying a home or financing a car, your credit record can make or break you.
“Knowing your credit score is a good place to start. By law you are entitled to one free credit report each year,” advises MJ Davis from DirectAxis.
Your credit score is calculated on information found in your credit report, including your payment history, what is owed, activity, how long you’ve serviced an account, judgments and defaults and enquiries about your credit-worthiness.
“Bear this in mind when thinking about your financial priorities,” says Davis.
“A poor decision today, could have long-term implications on whether you are able to access credit and other financial services in future.”
To share or not to share assets?
Is a prenup a good idea for newly-married couples? If celebrities are doing it, then it should be the route to take.
Bailey begs to differ, saying “It depends. If one partner comes into the marriage with millions, and the other with nothing, then a prenup is there as a protective mechanism.”
She explains that from a legal point of view, she would only advocate for one where there is an extreme imbalance of financial being.
But she does recommend an antenuptial agreement. This agreement is specific and out of community of property. “If you bring in assets, you can protect them and list them as excluded from community of property.”
Words to live by:
Jo-Anne Bailey’s 5 hacks for setting a realistic budget:
- Live within your means.
- The rainy day will come, start saving now for it.
- Prepare for disaster like the car needing new brakes or the roof needs fixing.
- Know that you can't live to the last cent every month, so plan ahead.
- Have one single household account and keep individual accounts because "it's wise to keep a little to yourself”.