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Making money work in (and for) your relationship

Managing your financial affairs as a unified team can help to fortify your finances.

We all know that money can be an enormous source of tension in a relationship, but it doesn’t have to be. Managing your financial affairs as a unified team can help to fortify your finances, open channels of communication and ultimately make your relationship stronger.

Here are some tips for making money work in, and for, your relationship:

Don’t keep secrets

When it comes to financial infidelity, keeping money secrets from your partner is a serious act of omission which can destroy trust. Be open and honest with your partner about your debt, financial obligations, your earnings and bonuses, the assets that you own, and your money goals. Truth always has a way of coming out and, when it does, can lead to suspicion and mistrust.

Prioritise your finances

Prioritising your joint financial planning is one of the most important steps you take in your relationship. The longer you neglect to take control of your joint financial affairs, the more likely it is that money problems will arise between the two of you. A good start is to find an independent financial advisor who can work alongside you to develop a joint financial plan. Your advisor should be able to help collate your respective objectives, prioritise them in a manner that you both find acceptable, and then create a financial roadmap for you. As and when your circumstances change, your financial advisor will help you recalibrate your plan.

Respect the difference between ‘work’ and ‘employment’

Staying at home to raise children and look after the family home is one of the most difficult, relentless jobs around. If you have a stay-at-home spouse, it is important to appreciate her economic value and the importance of the work that she performs for no pay. Cooking, cleaning, child-rearing, tutoring, taxiing, shopping, nursing, caring and educating are just some of the roles she performs, and it is a job that can feel thankless. Recognise that she may not be employed, but she works very, very hard. 

Insure yourselves

Together with planning for your joint financial future, it is also important to plan for a future on your own. Tragedies do happen and making provision for each other in the event of an untimely death is essential. The quantum of life cover you would each require depends on several factors, including your debt, income, number of children, monthly living expenses, the cost of future education for your children and the level of your retirement funding. Don’t make the mistake of assuming that your stay-at-home spouse does not need insurance cover. She likely performs valuable functions which, in her absence, you would need to hire someone to perform. 

Set up your banking strategically

Be sure to set up your banking and accounts in a way that supports how you have chosen to allocate responsibilities. For instance, the person responsible for the payment of accounts would need online access and OTP facilities, while the partner responsible for checking bank statements would need access to those. The partner responsible for the bulk of the shopping would need access to the credit card facility, or perhaps a shared credit card facility if you and your partner share this responsibility. If you are both earning an income, it makes sense that each of you operate your own transactional accounts. Having separate bank accounts is also more practical in the event of illness or tragedy as it means the other partner still has access to funds and can continue paying accounts.

Share the responsibility

If you don’t have a natural inclination for budgeting or money management, it is easy to let your partner take control of the financial affairs which can be problematic for many reasons. Firstly, this can leave you financially exposed and vulnerable if something should happen to your spouse. In the event of her death or incapacity, you would be unable to pay accounts, access funds or transact, and this can have major implications for your financial security. Further, while you may assume that your partner is happy to shoulder the burden alone, it could be that she feels overburdened, isolated and stressed in the absence of your help. Make a list of all the money-related functions that are required for the efficient running of the joint household and then share them equally between you. You’re in it together so it makes sense to work on it together, too.

Make all major money decisions together

Regardless of your respective earnings, commit to making all major money decisions together. Being excluded from important decisions such as property purchases, home renovations, holidays and/or appliance purchases can be both hurtful and disunifying.

Update your beneficiary nominations

If you have retirement funds and/or insurance policies in place, be sure to check the beneficiary nominations on these documents and update them accordingly, especially if you were previously married or took out the policies before you had children. If you have nominated your partner and/or children as beneficiaries on your life policy, the insurer will pay the proceeds of the policy directly to your nominated beneficiaries in the event of your death. This will ensure that they have access to funds soon after your death. If you have not nominated a beneficiary on your life policy, the proceeds of the policy will be paid into your estate and will be wound up accordingly, causing unnecessary delays for your family.

Draft a Will

Without a valid Will in place, your estate will be wound up under the laws of intestate succession in the event of your passing, and this is never ideal. A Will allows you to make specific provision for your partner and/or your children to ensure that they are taken care of if you are no longer around. Without a Will, your partner may be left with an enormous financial and administrative burden, and the state will appoint an executor to wind up your affairs.

Do your estate planning

In addition to drafting a Will, it is essential that the structure of your estate supports the intentions of your Will and that your Will is actionable. There’s little point drafting a Will that is ineffectual because your estate is inappropriately structured or lacks liquidity. For instance, you may bequeath the primary residence to your surviving spouse but not make adequate provision to settle the home loan in the event of your death. This could result in your spouse having to realise the family home to offset the liabilities in your estate and leave her inadequately provided for.

Have a Living Will or Advance Healthcare Directive

A Living Will or Advance Healthcare Directive is designed to give you a voice if you are in a medical condition where you cannot speak for yourself. Importantly, an Advance Healthcare Directive allows you to appoint a medical proxy to make healthcare decisions on your behalf. Each signing an Advance Healthcare Directive and appointing the other as a medical proxy can alleviate much heartache, confusion and family feuding in the event of an accident or illness that leaves one of you debilitated. As your nominated medical proxy, you are essentially trusting your partner – together with your healthcare providers – to make the right healthcare decisions on your behalf.

Keep your financial affairs private

Discussing your personal financial affairs with friends and family is never a good idea as it may be perceived as an open invitation for them to become involved in your finances. If you do need to talk to a family member or friend about your finances for whatever reason, ensure that your partner knows about it and is agreement. 

Draft a cohabitation agreement

If you and your partner live together but are not married, be sure to put a cohabitation agreement together. Our law does not confer legal standing on couples who live together, even if they have children together. A cohabitation agreement, also known as a domestic partnership agreement, can set out details relating to your finances, property, assets, pets, medical aid, debt and even maintenance.

Keep records

Create a filing system and keeping records of all important financial transactions including property purchases, loans, vehicle purchases, financing agreements, appliances, renovations and jewellery. Whether the relationship comes to an end through the death of a partner or divorce (or separation), you will be grateful for your good record-keeping. This includes keeping copies of identity documents, birth and marriage certificates, divorce orders, passports, wills and maintenance orders.

Have a plan for your aged parents

As your respective parents grow older you may need to become more involved in caring for them or in assisting them financially, and this can create tension in your relationship especially if you are at odds about how to go about it. Caring for aged parents can be time-consuming, emotionally taxing and can set you back financially. You may have differing opinions on suitable living arrangements of your aged parents or the extent to which you can give them financial aid. Either way, these are discussions that should be had well before the situation presents itself and emotions are raw.

Manage your debt

Disparate attitudes towards debt can be an enormous source of conflict in a relationship. While debt can keep some people awake at night, others feel comfortable taking greater risks when borrowing money. Being empathetic to how debt makes your partner feel is key to finding common ground on what constitutes a reasonable level of debt in your relationship. Honour whatever you and your partner agree upon and, whatever you do, avoid incurring debt behind your partner’s back.

Trust each other

Avoid being overly controlling when it comes to joint finances as this can cause frustration and resentment. If you’ve structured your finances appropriately, developed a joint plan, and assigned roles and responsibilities, there should be no need to micro-manage each other. Trust each other to act in the best interest of the partnership, and continually support and acknowledge each other’s role in the financial journey.

ADVISOR PROFILE

Gareth Collier

Crue Invest (Pty) Ltd

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