Financial differences can cause frequent stand-offs and may lead to an eventual demise of a relationship or marriage. But couples can avoid this by planning their finances together, says Indwe Bluestar Authorised Principle, Danie van Niekerk.
He says the journey starts with creating a non-intimidating environment where open conversations can take place.
“Money can be a sensitive matter, but it is important to bring it to the table. If your partner is avoiding this discussion and you aren’t communicating as often as you should about your financial commitments, think about how you can build a friendlier environment for such conversations.”
Here are some suggestions on how to establish a harmonious financial life as a couple:
- Planning for your lifestyle aspirations
A key part of any committed couple’s financial life is having a financial plan which covers short- and long-term goals. A financial planner can help you prioritise your goals and create a plan to reach those goals. Your financial plan should take into account the kind of lifestyle you would like to live, as well as savings for emergencies, retirement, children’s education, deposits for big purchases, or a wedding if it’s in the pipeline. You should also discuss how to prepare for unforeseen events such as death, illness, disability and unemployment. You need to align your future aspirations because the amount you need to save is dependent on these. For example, your idea of retirement may include international travel while your partner may be content with moving to the countryside with occasional domestic trips. Similarly, the schooling you choose for your children – public or private schools – or the suburb and size of house you have in mind may require a very different financial commitment than what your partner envisaged.
- Managing extended family responsibilities
As a couple you may come from different financial backgrounds. One partner’s family may need financial support while the other doesn’t. Discuss how much support will be provided to the respective families and manage extended families’ expectations together.
- Budget for monthly savings, spending and donations together
Budgeting is an essential tool to understand where one intends to spend money and how much. Discuss with your partner how much is available to save, what you can afford to donate, but also look at where you can free up some cash. Set aside time to revise your budget on a regular basis so that you can plan ahead for additional future expenses, e.g. child care when a child is born or additional money for transport when taking up a job further from home.
- How to formalise finances in your relationship to allow for unforeseen events
A will and an antenuptial contract are some of the important legal documents that can help you manage the distribution of assets or debt in the case of unforeseen events such as death, insolvency or divorce. If married, the type of marriage contract you chose will affect how financial and physical assets, as well as debt which existed before and after the marriage, are distributed. Your financial planner, working together with a legal adviser, can help you determine the best route to plan for these events.
To help you set financial goals and make more informed decisions about you financial future, speak to our expert planners at Indwe BlueStar on 011 831 8000.
Indwe BlueStar is an authorised Financial Services Provider. FSP 2759