About To Get Hitched? Here’s What You Need To Discuss First
You’re investing a small fortune in your wedding; paying for the venue, catering, her wedding dress, the honeymoon… the expenses are piling up for the big day ahead. But while you’re spending all that cash on your wedding day, don’t forget to plan for your marriage.
Janine Player, Financial Planner at Old Mutual Private Wealth Management says, couples who want to have a successful and mutually beneficial relationship should be honest about their financial position before heading into their marriage. “Although financial security may not be top of the list for many couples looking to settle down with their dream partner, lack of transparency regarding one’s financial situation upfront can lead to marital turmoil in the future.”
To avoid having your marriage ruined by financial problems, keep these four things in mind:
1. Be Transparent About Your Finances
“Money problems are the most common reason for divorce, it is therefore imperative that couples openly discuss their finances prior to getting married should the marriage end in divorce,” says Player. Regardless of what you and your partner earn, you should have a frank discussion about what you earn, any debt you have, what store accounts you have and what your general spending habits are.
2. Set Clear Financial Goals
Now that two is becoming one, it’s important to discuss your financial goals for the future. These include buying property, financing your children’s education, your retirement plan, insurance for your lifestyle needs, and setting up an emergency fund for rainy days. One way to make sure you meet your goals is to draw up a financial plan. “Having a financial plan drawn up puts couples on the right path to help them achieve their short term and long-term lifestyle goals,” says Player. Having a plan helps you avoid any future frustration by giving you clear steps that both of you need to follow.
3. Choose A Matrimonial Property Regime Based On Your Needs
The phrase “Matrimonial Property Regime” may sound like a mouthful but it’s important to be acquainted with its implications before you get married. It legally governs the ownership of property between spouses and determines what happens to it if a couple gets divorced or one of them dies. Considering the high rates of divorce in South Africa it’s best you’re aware of the implications of the regime you choose when you get married.
Married in community of property: When both spouses’ assets and liabilities are combined into one estate and both parties have equal shares to the estate regardless of what each individual brought into the marriage. This is the default option, and applies if partners don’t sign an ante-nuptial agreement.
Married out of community of property with accrual: This option is for couples that decide to draw up an ante-nuptial agreement (ANC). Each partner controls their own estate, which consists of their assets and liabilities they had before getting married, as well as those they accumulate during the marriage. If the couple gets divorced they leave with the assets they’re in control of.
Married out of community of property without accrual is similar to the marriage contract drawn up with accrual. It differs in that any assets and liabilities accumulated during the marriage are shared equally between the spouses in the event of divorce. The individual’s assets, which they had before getting married, and their value, are listed on the ANC. These assets or their equivalent value is not shared.
4. Review and Upgrade Your Financial Plan Regularly
As you both age, your goals will change. “Changes in careers, promotions or the pursuit of additional income streams may result in disparities between income, making it essential that the plan is regularly reviewed and updated,” says Player. Discuss your financial goal each time your finances change to ensure you’re both still on the same path. Failing to do so could cause arguments in future if you don’t agree with each other’s decisions.
If you struggle with setting up a plan or choosing a matrimonial property regime, Player recommends hiring a financial planner.