Money is the number one reason that couples fight but early, upfront communication about money and finances would go a long way to reduce the stressors and triggers that cause financial friction. In fact, there is a widely held belief that marriage preparation classes should include a section on financial planning and money management to bring marrying couples onto common financial ground even before taking their vows. Regardless of a couple’s net worth or income, setting time aside before the nuptials to discuss financial planning in the context of your married life can be empowering and unifying.
Type of marriage contract
Choosing the most appropriate matrimonial property regime for your circumstances is important because your marriage contract will set out the legal consequences of your marriage. Avoid simply getting married in community of property because it is the default regime and does not require any legal costs to be incurred. In community of property is a deeply flawed marital regime that can have onerous consequences particularly where one spouse is heavily indebted. An out of community of property marriage that incorporates the accrual system is a much fairer and equitable regime and allows couples to structure their ante-nuptial contracts to suit their particular circumstances, with the purpose being to change some or all of the automatic consequences of marriage.
Financial obligations to previous spouse or children
If you or your partner have financial obligations to a previous spouse and/or children, it is highly advisable to unpack the financial dynamics of these relationships and to lay ground rules going forward. Maintenance obligations flowing from a previous relationship will undoubtedly impact your joint financial planning going forward, so don’t shy away from the difficult conversations. How long are you obliged to pay maintenance for? How much do you pay? What happens if your ex-spouse makes additional financial demands on you? How will we ensure that your children from a previous marriage and our own children are treated fairly when it comes to money?
Operational money management
To ensure the smooth management of your household money and to ensure that nothing falls through the cracks, discuss how the operational aspects of your finances will work after you get married. This will involve making decisions about whether to operate joint and/or separate bank account, setting spending limits, creating a budget that is equitable to both parties, agreeing on who pays for what, allocating roles and responsibilities, and reaching compromises on areas of disagreement.
Understanding each other’s attitude towards – and propensity for – taking on debt is vital for the success of your relationship. Disparate attitudes when it comes to incurring debt can lead to insurmountable problems not least because debt can be a highly emotive issue. Where a risk-averse partner is persuaded to take on more debt than they are comfortable with, this can lead to heightened stress and anxiety, which in turn can lead to resentment and anger.
Further, the nature of your marriage contract will determine the legal consequences of debt in the context of your relationship, so take this into account when having your discussions. For instance, if you are married in community of property, all debt belonging to you and your spouse – including that incurred before the date of your marriage – will form part of your joint estate. This means that you can be held responsible for the debt that your spouse incurred before you got married, and vice versa. It also means that your creditors can attack the joint estate which can leave you financially vulnerable.
Make sure that you have a common vision with regard to owning property. While most couples share a vision of buying a home together in which to raise a family, this is not always the case. Some are more comfortable with the idea of living in a rented property, with the option to rent larger property as and when the family grows. Some don’t like the permanence of owning property, nor the innate risks involved, opting for the more fluid option of renting.
If buying a family home is a shared vision, talk about price, location, size, amenities, and the non-negotiables. In whose name will the property be registered? Who will be responsible for paying the bond each month? Who will cover the insurance costs? How does your matrimonial property regime impact your property ownership should the marriage end through death or divorce?
As a married couple, you will want to ensure that you are both adequately provided for in the event of death or disability, so take time beforehand to put the appropriate level of cover in place. If you or your partner have group life cover, investigate whether there are options to increase your cover, keeping in mind that group risk cover is generally more cost-effective than personal life insurance. If you have existing policies in place, ensure that you change the beneficiary nominations on your policies so that they are aligned with your marital status and your intentions.
As a married couple, it may make financial and practical sense to belong to the same medical aid where one spouse is the principal member and the other an adult dependant. If you belong to different medical aid schemes, do your research on which medical aid would be appropriate for your combined healthcare needs. If one partner enjoys a group medical aid subsidy, it may make financial sense to join that spouse’s medical aid.
Open and honest communication with regard to financial priorities and goals will create a blueprint on which your joint financial plan can be built. Through the process, it is important that both partners feel heard and that their goals are equitably represented. Accepting that each of you will likely need to make compromises over the course of the marriage is part of working and communicating as an effective team. Be intentional about sharing your goals and ambitions when it comes to travel, buying property, studying further, having children, competing in sports, learning new skills, pursuing a hobby, or setting up a business.
If you intend to have children together, be sure to have an all-important discussion about childcare. Not every mom (or dad) dreams of being a stay-at-home parent, so discuss childcare options that will work for both of you, keeping in mind that both of you have an equal right to pursue your careers and reach your full professional potential. If one of you does wish to be a stay-at-home parent, consider the option of living on one salary while saving the other until your child is born. Many couples attest to this being the most valuable piece of financial advice when starting out their young lives together.
Financial value systems
Differing value systems when it comes to money can create enormous tension in your relationship, especially when children enter the mix. In preparing for marriage, use probing questions to explore your partner’s financial value system. What does financial freedom look like to you? What is your vision for retirement? How much is enough? How do you believe we should build our wealth? Do you believe in paying more for quality? What are your views on gift-giving? Do you prefer material gifts or experiences? How and what would you want to teach our children about money? What level of debt would you feel comfortable with?
With the vast majority of South Africans being underfunded for retirement, it makes sense to talk about your respective parents’ retirement. Can your parents afford to retire? Will you need to help them out financially? How does your partner feel about that? Would they be happy to share the costs? Would you consider having your parents live with you? Family dynamics and relationships are always difficult to navigate especially where money is involved. Going into your marriage, make sure you and your partner are on the same page when it comes to providing financial support to aged parents if and when the need arises.
Joint financial planning
Ideally, you and your partner should commit to having a joint financial plan prepared for you at the outset of your marriage that forms a roadmap for your financial future and paves the way for you to build sustainable wealth together over time. Your joint plan should address your risk (life, disability, severe illness), investments and retirement planning, estate and tax structuring, personal financial management, debt, budgeting, and business planning (where one or both of you have business interests. Importantly, your respective wills should be structured to reflect your marital status and your intentions in respect of distributing your assets and providing mutually for each other.