Working towards someone else’s goal
Individual goalsetting is relatively easy. Agreeing to a common set of short-, medium and long-term goals as a couple can be more challenging because you’re dealing with two separate, unique individuals with different dreams and aspirations. One of you wants to live in a lock-up-and-go apartment with dreams of travelling every year, while the other wants a large home in suburbia. One partner may be content with living frugally, while the other places value on material possessions. One person may want to save as much as possible towards retirement while the other has a more YOLO approach to life. Whatever your individual goals may be, you need to work towards finding common financial ground on which to start building your life together and ensure that both sets of goals are fairly represented.
Committing financial infidelity
Financial infidelity entails a lot more than hiding money or bank accounts from your partner. It can include other acts of unfaithfulness such as lending money to family or friends without your partner’s knowledge or consent, making large purchases and hiding the evidence, making large financial decisions without your partner’s input, or not revealing the extent of your indebtedness to your partner. Financial infidelity can have devastating effects on a relationship and can severely compromise a couple’s future financial stability.
Sharing your finances with family and friends
A couple’s financial circumstances are private, and this privacy should be respected by both partners to the relationship. ‘Talking out of turn’ to your best friend, parents or work colleagues about your personal finances can leave the other partner feeling exposed and betrayed. If you do feel the need to speak to someone about your finances, make sure your partner is in agreement and, ideally, employ the services of an independent financial adviser to counsel you.
Engaging in financial power struggles
Financial power struggles tend to arise where one partner earns significantly more than the other, or where one partner’s net asset value is significantly greater than the other. Money-related power dynamics are difficult to navigate, and much of it boils down to the financial value system of the couple. If making money is your ultimate goal, then power struggles are bound to arise. However, if money is viewed as a means to create a better financial future for both of you, the struggle for power tends to dissipate in favour of achieving common goals.
Going into the marriage blind
With couples getting married later in life, many relationships come with added complexities such as an ex-spouse, children from a previous relationship, and maintenance obligations – all of which can put financial strain on your relationship. Before entering into a long-term relationship, it is only fair to disclose all material information relating to your finances including debt, previous failed business ventures or insolvency, maintenance obligations and loans made to family members or friends.
Not signing an ante-nuptial agreement
Many couples avoid signing an ante-nuptial contract because of costs and convenience, but the effects of doing so can have significant financial consequences if and when the marriage dissolves. In the absence of an ante-nuptial contract, your marriage will automatically be deemed to be in community of property. This means that all the assets and liabilities of each partner will be merged together in a single joint estate, including all and any debt that your partner incurred before the marriage, and any debt that he incurs during the marriage. An ante-nuptial contract including the accrual is a way to ensure that each spouse in a marriage receives a fair share of the estate when the marriage comes to an end. Before marrying, give careful consideration to the matrimonial property regime that is best suited to your circumstances.
Not talking about your aged parents
Every long-term relationship comes hand-in-hand with its own set of dynamics when it comes to parents-in-laws and extended families. As your parents age, you may find yourselves needing to assist them financially, emotionally or logistically, and this can put strain on your relationship. Make a concerted effort to find out sooner rather than later whether either set of parents will require financial support, and to what extent. Have open conversations about how you and to what extent you can help them without compromising your own retirement planning or your children’s financial needs and be sure to include your siblings in these discussions.
Allowing one partner to take control of the finances
If money isn’t your strong point, you may find it easier and more convenient to allow your partner to take control of the finances, especially if you know she enjoys it and has a head for numbers. Relinquishing financial control to one party in a relationship is one of the worst mistakes you can make as it leaves you vulnerable and financially exposed should tragedy strike. If your partner is in anyway incapacitated, whether through illness, accident or in the event of death, you may find yourself in a position where you cannot pay bills, access investments, or do online banking.
Not having your own bank account
Regardless of how you choose to manage your money and bank accounts, it is always advisable that each partner has a bank account in their own name. When it comes to applying for credit or financing, you will need to provide proof that you operate a bank account and that your credit score is acceptable. Further, in the event of your partner’s death, your joint bank accounts may be frozen, and this could leave you without access to cash.
Assuming the stay-at-home spouse does not need life cover
Many single-income families make the mistake of insuring the life of the breadwinner without considering risk cover for the stay-at-home spouse. What they fail to take into account is the economic value of the multiple jobs performed by the stay-at-home spouse which, in turn, allow the earning spouse to have a career and generate income. When considering life insurance for the stay-at-home spouse, give consideration to the cost of replacing her role as carer, transporter, cook, cleaner, child minder and homework supervisor, and then protect that risk accordingly.
Buying property too frequently
Many couples, keen to own their own home but unable to afford the house they dream of, purchase property just for the sake of entering the market. As their family grows and the need for more space arises, they buy and sell property according to their immediate affordability, all the while incurring bond and transfer costs. Before buying property, give careful thought to considerations such as whether you are planning to have children, where you would like to school them, what facilities you would like to live near to, whether you require live-in domestic help, whether you would like pets, and the location of your work in relation to where you live.
Prioritising your children’s education over your retirement planning
As much as we all want to provide our children with the best possible opportunities, sacrificing your own retirement planning to pay for your children’s tertiary education is not ideal. Bear in mind that, while your children can take loans to help fund their studies, borrowing to fund your retirement is not possible. Ideally, find a balance between saving for your own retirement and putting money aside for your children’s education. At the same time, talk openly with your children about other funding mechanisms such as student loans, bursaries and scholarships, part-time work and online study opportunities.
Have a great day.
Sue
