From our experience, tensions about money often arise because couples haven’t taken the time to talk to each other about their finances before they get married. Once your marriage is formalised, it is important to bear in mind that there are financial consequences to being married and it pays, literally, to merge your finances in a way that works for both of you. Before getting married, talk to each other openly about money and how it will form part of your relationship going forward. Here are some questions you and your soon-to-be spouse should be tackling.
The wedding
What is our wedding and honeymoon budget? What matrimonial property regime should we get married under? Do you have any financial obligations to a previous spouse, children or family members?
Spending too much money on an elaborate wedding and an Instagram-worthy honeymoon is one of the biggest mistakes a couple can make. The wedding industry is big business and there is lots of pressure on young couples to stage an elaborate wedding to impress family and friends. Borrowing money to fund your wedding and/or honeymoon is a terrible idea and will result in you starting off your married life encumbered by debt. Also, before getting married, get advice on the matrimonial property regime most appropriate for your needs and personal circumstances – and avoid getting married in community of property simply because it is less hassle upfront. Speak to your partner about any financial obligations he has towards a previous spouse, children from a previous relationship, or to a family member so that it doesn’t cause resentment later on in your marriage. In other words, be absolutely sure you know what you’re getting in to before making a lifelong commitment.
Debt
Do you have any debt? If so, how much? What is your attitude towards debt? When is it okay to go into debt? How do you feel about buying on credit? What is your credit score? Have you ever been insolvent? What is your attitude towards gambling?
It is absolutely critical to gauge and understand your partner’s attitude towards debt. While you may need to take out loans to finance the purchase of a home or vehicle, discuss how each of you feels about buying on credit or incurring lifestyle debt. Also important is to establish how much debt he currently has in place, why it was incurred and how he intends to pay it off. Be cautious of anyone with a cavalier approach towards living beyond their means, incurring lifestyle debt or someone who has a propensity for uncalculated risks or gambling.
Family
How do you feel about lending money to family members? Would you accept financial assistance from our parents? Do you think you will need to support your parents financially as they get older? If so, what are your views on this? Would you want your parents to live with us when they are older? Do you have family living overseas? Do you intend travelling to see them on a regular basis?
Speak to each other about your respective families and the extent to which your finances will interlink with theirs. It is common knowledge that many aged parents are under-funded for retirement, so have discussions early on about the extent to which you will need support such parents financially, and how you will prioritise your own financial futures. Discuss, also, your attitudes to receiving financial assistance from a parent to purchase a new home or set up a new business. With many South Africans being scattered around the globe, discuss the reality that you may need to incur costs visiting family members who live abroad, how this should be budgeted for, and what is considered reasonable travel expenses.
Property
What are your views on owning property? Would you prefer to rent property rather than buy a home? If so, why? If having a home of your own important to you, why?
Make sure you are both on the same page when it comes to buying a home and settling down. If one of you would prefer to rent a house while the other dreams of owning their own home, you will need to find middle ground somewhere. Discuss your attitudes towards property as a form of investment, where you would like to buy, and for how much.
Goals
What are your goals for the future? Is travel important to you? If so, where would you like to travel to? Do you give to charity? If so, which charity and how much? What do you spend your fun money on? What high cost item would you like to buy in the medium term? Do you plan to study further? If so, will it be full or part time? How will your studies be funded?
Talk to each other about your personal goals for the future so that you know upfront what each of you would like to prioritise and channel money towards. Tensions can arise when one partner wants to save money for a deposit on a first home while the other would prefer to use the money travelling before children arrive. Some hobbies can be expensive, so unpack what is important to each of you and be realistic about how much money you will put aside for fun money.
Money management
Should we merge our finances after we get married? If not, why not? What do you earn? And what is your future earning potential? Should we operate a joint bank account? If not, why not? Who is going to be responsible for paying what? Should we set a spending limit? If so, what should it be? Do you currently have an emergency fund? What is your attitude towards financial planning? Would you be open to hiring a financial planner to help us with our affairs?
Probably the trickiest area for newly-weds is the issue of joint financial management. Merging two income streams towards the running of a common household and for the achievement of a common set of goals is no easy task. Before you get married, decide how you will operate your banking, the paying of bills, debt management, shopping and day-to-day decision-making. If necessary, agree to a spending limit and agree to the level of financial transparency you are each comfortable with. Importantly, determine whether your partner is open to the development of a joint financial plan with the help of an independent expert.
Children
Do you want children? If so, when and how many? What money values would you like to instil in our children? How and where would you like them to be educated? If we can’t have children naturally, would you be prepared to spend money on infertility treatment? If we have children, do you believe that one of us should stay at home to raise them? If so, which one of us and for how long?
It’s not only important to be on the same page as to whether you would like to have children. It’s also important that you agree on the money value system you wish to instil in them. In a brand-conscious society, it is difficult raising children who are not in some way affected by materialism and hyper-consumerism, so talk to each other about how and what you intend teaching your children about money and finances. Discuss what type of schools and/or universities you would like them to attend, and how you will finance their education. Talk about the costs of possible fertility treatment, the financial burden that comes with child-rearing, whether stay-at-home parenting is an option, and the longer-term effects of one spouse opting out of their career to raise children.
Retirement
Are you currently saving towards retirement? If not, why not? At what age do you want to retire? Where would you like to retire to? What would you like to do in retirement? Is travelling important to you? Where would you like to travel to?
While retirement may seem far off, get to know each other’s dreams for retirement. If one partner dreams of retirement in a small fishing village while the other wishes to cruise the world, at the very least be aware of your differences before getting married. You’ll have a lifetime in which to discuss, debate and find ways to reach compromise, but understanding and respecting each other’s goals is an important first step.
Have a great day.
Sue
