Tips for the bride

We don’t want to start our relationships negatively, but the reality is that 80% of women will die single while 80% of men die married, plus the divorce statistics show that a third of marriages end in divorce, so it’s important to have a conversation about money and how the two of you manage it as a couple.

Although you might not want to spoil your early wedding bliss, a budget is an important place to start. Many women feel uncomfortable with this conversation, but it’s a step on the road to financial independence and empowerment.

Planning the money stuff upfront is essential, as mistakes can be very costly to unbundle and an experienced and trustworthy financial advisor will prove invaluable as part of this planning process. Any costs involved will more than pay for themselves down the line.

Case Study:

Lerato had dated Max since their early 20s, and after 9 years of dating and later co-habitation, he finally popped the question.

They have completely different spending “personalities” – he’s a saver, while she’s a spender. Their backgrounds are very different. He was brought up strictly in a conservative home and any “spoiling” was used for gifts of a practical or educational nature. A family budget was par for the course and the kids simply knew not to ask for luxuries. She, on the other hand, was brought up in a very liberal and relaxed household where her parents took pleasure out of fulfilling her every whim. Pocket money was merely a token – she simply needed to ask and was given whatever she needed. There was no concept of a budget and very little guidance around saving.

Both are well educated but he earns significantly more than she does. Money is a source of conflict in their relationship. She is all about “carpe diem” and he is a constant worrier who wants to ensure that their future is well provided for.

Out of concern for her long-term marriage success, Lerato’s best friend finally convinced her to see a financial planner before she walked down the aisle.

Tips from the financial planner

1. Talk about the money stuff

Spend time trying to understand your perspectives around money, and your accompanying spending personalities. Realise that a large part of this is ingrained and cannot easily be changed. Be completely honest with each other about your individual balance sheets (assets and liabilities) and income statements (what you earn vs what you spend). Never let money become a taboo subject. Have a frank discussion about what you would both like to achieve from a financial perspective going forward and then set some goals accordingly. Set regular check-in sessions where you gauge how you are faring in your progress towards short-, medium-, and long-term goals.

Topics under discussion can be as simple as chatting about a way to decrease your electricity usage or how much you’ll need to save to go on that skiing trip next year, or of a more serious nature – like considering whether to buy your first home.

Talking about “money stuff” can be scary and many couples avoid it, but it is one of the cornerstones of forming a rock-solid, trusting relationship and will actually bring you closer together.

2. Plan the money stuff

It’s important to realise that “money stuff” is not only limited to monetary savings and budgeting – you also need to consider the following:

  • Your legal marital regime
  • Drawing up a new will
  • Medical aid cover
  • Risk cover (death; disability; income protection etc)
  • Tax efficiencies

There are a number of different ways to handle finances within a marriage. They range from complete autonomy to fully sharing the household and living costs equally and fairly, depending on each partner’s income and contribution to the family budget.

At one end of the scale a couple can merge their finances completely. This would involve consolidating and sharing all income and expenses.

At the other extreme, a couple could keep their finances completely separate and allocate certain expenses to each partner.

Most financial advisers suggest the best option is to open a household bank account. Each partner makes a monthly contribution to the household account, and all joint expenses are paid from it. With this option, each partner is able to retain their own banking relationship and credit history. It also enables each partner to maintain an element of financial independence and freedom. This solution is very effective for couples who have different spending habits such as Lerato and Max.

The one challenge is the couple needs to determine an equitable amount for each partner to contribute towards the joint account. A fair way of doing this is simply to use an equitable percentage of each individual monthly income. This solution is also usually the easiest way to keeps tabs on and stick to a budget.

3. Don’t give up YOUR money stuff

Financial independence cannot be regarded highly enough. As much as getting married involves sharing pretty much everything with the person you love, it is essential to maintain individual financial stability and security.

  • Always have a bank account in your own name
  • Maintain a credit record in your own name
  • Strive towards your own individual savings outside of your planned joint savings
  • Always know where your money is and how it is being used.

Although no bride wants to consider the possibility of divorce, you do need to ensure that you’re going to be ok if things go off course down the line. It’s your absolute right – and in fact a duty to yourself – to maintain your financial independence and to ensure that you are fully up to speed and in control of your financial affairs.

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