Money and Finances now you are married.
A lack of communication, especially about money, can destroy a marriage!When you were single, you controlled your money.
Now there is someone else who has needs to be involved and it may not be easy to talk about the finances both of you need to agree on.
Research has shown that most couples avoid discussing financial issues because they feel it deters from the romance in their relationship.
Arguments over money are one of the leading causes of marital problems and divorce.
But being smart about how and what you spend and save is critical to a balanced relationship.
You need to Communicate!
Agree to talk to one another about your financial situation. What you want to do is to see where you both are today - financially.
What assets you have and what liabilities you owe.
Deduct the liabilities from the assets to get your net worth.
Don't worry if you owe more than you have, this is just information needed to set your financial plan!
And for goodness sake, be honest!
Next, talk about where you want to be in the future.
Your short, medium and retirement goals.
What you want to do is create a plan that will clarify what each of you needs to do to reach these goals.
How much you will need to save and where your invest these savings for the best growth.
It's not a easy task and perhaps now is the time to call in a professional financial planner to assist you?
Then, set a budget.
The aim is to identify where your money is spent and where you can cut back, to help provide for the savings you need.
Of course it is wise to save and invest.
But don't try force your opinions on each other. And don't hide them from one another.
If you are worried about your partner's spending habits, financial decisions, or your part in managing the joint money, say so.
One of you may be better at finances, but instinct also plays a vital role!
Bank accounts:
To each their own? It's up to you whether you maintain a joint or separate account.
It may be a little easier to work with a joint account, but it is more difficult to control the spending on it. Not to mention the problems if you separate from one another!
Why not open a joint account, that you each contribute to, for household expenses but also maintain separate personal accounts, which gives each of you some spending freedom?
Marriage is a partnership and while equality in your relationship is important, so is a certain amount of independence.
If you are non-working spouse, think of your allowance as a salary for the very vital role you play.
Now the real cause for concern.. Credit.
Sooner or later you will probably apply for credit. Remember, if you do it jointly, you both are responsible for 100% of the credit.
So, if you default on a payment, both of you are fully liable.
Separate credit avoids this - except if you are married in community of property.
If one of you had a bad credit rating before your marriage, keep separate credit as you don't want to affect the other's good reputation.
Retirement investments.
You both need to contribute towards retirement.
Not only will this increase your available capital and share the responsibility of saving, but it can lessen the tax liability on your lump sums.
Please realise that your company fund will not be enough to secure a comfortable retirement.
Both of you should try to save outside of company plans.
And if your spouse does not work, there are still avenues to investigate - that can lessen your tax liability, at the same time as implementing a retirement savings plan.
Call me!
Medical Aid.
If you have the option of joining ether’s medical aid, you may want to both join the medical aid of the spouse who earns the lower income.
This has income tax benefits should you have high medical expenses in any one year.
Your Will - You may not have a will, or may need to change your existing will now you are married.
Prepare your wills together and consider the option of a prenuptial or post-nuptial agreement.
The conversations involved with creating these documents are valuable and the legal process will help protect your union in the case of death or divorce.
A Financial Checklist for Newly-weds!
People are getting married later in life. By that time you both may have sizable assets and have a vital need to protect them.
Here's a checklist of things to do after the honeymoon!
- Change your beneficiaries - Review all your investments and insurance policies, especially if you want your new spouse to own your assets should something happen to you.
- Don't avoid the issue of life and disability insurance. It my be you who survives! Both of you need to protect each other just in case.
- Review your insurance policies - Have you got enough cover to protect your spouse?
- Is your Short-term cover over-insured; do you both have cover? Maybe both of you insure through the same company and negotiate a discount?
- Review your financial goals (retirement, reducing debt, buying a new Home, etc.), and set new goals as a couple.
- Decide upon who will be responsible for paying the bills and taking care of other financial tasks. Which one of you will be better at this?
Usually, one of you manages the finances, but it's vital that both of you are involved.
Write everything down and file all the back-up documents.
You are not policing each other, but if a problem arises it makes solving it less stressful!
And it may save the marriage.
083 655 2164
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Peter Pyburn - Authorised Financial Services Provider, fully licensed to render financial services since 1991. Death and Disability Planning; Retirement Planning; Investment Planning; Healthcare and Estate Planning. More...
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Last update: October 2, 2024