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Partners
Couples who make separate decisions about money argue the most about it.
According to a report by UBS Investor Watch, couples who truly share financial decisions feel the most confident about their future – but only one in four couples falls into this category.
In many cultures, it is considered bad manners to discuss money. If you speak to your partner about money, the perception is that you are a gold-digger.
But if you’re marrying someone, you need to know what assets they have and what debt they owe.
Be aware that there is “good” and “bad” debt – long-term debt such as a home loan is seen as preferable over high-interest short-term debt like store cards.
Your future spouse’s financial standing would potentially determine the marriage contract you choose, for example in community of property or an antenuptial contract with or without accrual.
Having a contract doesn’t mean you think you will get divorced one day – it is part of sound financial planning.
Plan a regular money date
Discuss your current financial situation and how your cash flow is doing.
Were there any unplanned expenses recently? Are there any big purchases necessary in the future? How will these be paid for?
How have your long-term plans changed and are you still on track? These conversations are not only for the mundane day-to-day expenses, but also to plan for holidays, houses and children.
Set up a savings reserve
Financial planning isn’t just about how to pay accounts each month.
Make sure you have a plan to pay debt and set up a financial safety net so that you have some money to spend during an emergency.
What if one of you gets sick or loses their job? How will that affect your combined budget?
Determine what’s yours, mine and ours
What would be the impact of holding assets in a different person’s name?
For example, what happens if your spouse’s business goes under and you are married in community of property? You will be liable for the loss even if you didn’t incur it.
Should you buy property in one person’s name to protect an asset in the event of a business going under and if you are married with an antenuptial contract, what happens if all your assets are held in the other person’s name and you have to split up?
Are you entitled to some of those assets?
Make it legal
You don’t have to marry someone if you are both comfortable with the status quo, but what happens if you split up or one person dies?
If you are living together, get a partnership agreement to set out what happens to assets during good times and in bad.
You might not get any of the estate if your partner doesn’t have a will that leaves assets to you.
If you are married traditionally, make sure you have registered the marriage at the court so that there can’t be any confusion about your position in the relationship in the event of death or separation.
It is easy to deny a benefit if there are cultural differences in the interpretation of a relationship status.
Update where you are in terms of your family assets and protections
Do you both have life cover that would protect your loved one’s income in the event of your death?
Or are you covered with an income benefit to protect you if you can’t work any more? How would such an event affect your household finances?
If your income is dependent on a former spouse’s maintenance payment, you can take out life cover to make sure that the income will carry on in the event of the person’s death.
Are you sure that your loved one is still paying the premiums on the policy that you assume is still in place?
Swap credit scores once a year to check if there might be something to be worried about or that needs to be fixed.
You don’t want to only find out there is a problem when someone arrives on your doorstep to take away your house.
Compare company benefits to see if you are sufficiently covered for death and/or disability.
Also, discuss if you are both saving for retirement through the company or not so that you know what is happening with your long-term planning.
Know when your loved one has cashed in a policy and for what purpose, and understand how that affects your overall financial standing.
Cool is a certified financial planner at Alexander Forbes Financial Planning Consultants
