Tying the financial knots
Finance is an important part of any marriage, and it affects everything from the monthly budget for household goods to affordability when purchasing a home, education for your children and when and where you’ll be able to retire.
If you are planning to tie the knot any time soon, when is the right time to talk about your finances?
“The sooner, the better,” says Magdeleen Cornelissen, a financial adviser at PSG Wealth Menlyn. “You’ll need to decide what type of marriage contract to enter into, and this is usually a good opportunity to talk more broadly about money and finances if it hasn’t come up before.”
Here are some points to bear in mind:
* There is no one-size-fits-all solution to planning financially as a couple, but most couples will find that there are some parts of the finances that they share and others that they keep apart.
As time goes by, the allocation of financial responsibilities may change, especially if one partner earns substantially more than the other.
* A household budget is essential to manage income and expenses. If both partners earn an income, it probably makes sense for both to contribute to the expenses. It doesn’t have to be a 50/50 split, but it can help to keep your interests aligned as a couple if you are both carrying some of the financial burden.
“In single-income households we often find that the non-income-earning partner plays an equally important role as they are usually responsible for the financial management side of the family unit,” says Cornelissen. Perhaps the best advice is to remember that each partner should budget within their means, situation and strengths as both partners’ contributions count.
* When it comes to finances, do you and your partner have the same end goal in mind? “It’s important to check that your views are aligned when it comes to the long-term financial visions you have for yourselves as individuals and also as a family unit,” says Cornelissen. When couples are not aligned in their vision it can lead to unnecessary conflict, so it’s important to talk about this upfront, and also to continue the conversation throughout your marriage.
* Include your partner in your thought process around capital and building long-term wealth. Talk about your individual investment goals, estate planning and income protection needs, as well as how you want to approach these as a couple. Consider some updates that will be needed, such as to your wills, changing of beneficiaries on policies and reviewing medical scheme cover. In addition, short-term insurance should be reviewed.
* Working with a financial adviser to help you formulate a joint financial plan is a great step to take together before you walk down the aisle, and periodically thereafter.
“Financial happiness is priceless in a marriage, and because money can be an emotional topic, having a neutral party to advise you can be a great asset,” says Cornelissen.
* Once you’re married and have a financial plan in place, you need to make sure you stay on track. Having a meeting two or three times a year where you check in with each other and discuss expenses, debts and investments is highly recommended.
You should also meet with your financial adviser at least once a year and notify them if your circumstances change at any point. Typical life changes such as having a baby, changing jobs or moving to a new house can all have a significant impact on your financial situation.
“Thinking through each step and its financial implications will help to keep your finances - as well as your marriage - robust for years to come,” Cornelissen adds.