When we’re in love, many of us forget to ensure that our relationships are financially stable as well. In many instances this can create unhappiness down the line.
Ester Ochse, Channel Head at FNB Financial Advisory says couples often do not talk openly and honestly about their finances. However, the delicate balance between financial guidance and openness is essential to building a prosperous union. “Be in love and happy, but also talk about the real issues in life,” she advises.
“Keep a level head and remember that in as much as you admire someone, it is also important to accept that people come with individual experiences – financial and personal. Having an open and honest financial discussion from the outset can make your relationship stronger.”
Here are her suggestions for keeping financial harmony in your relationship:
1.Adopt a formal approach
A formal approach to money management is the most beneficial one. Understand the broader family tree and other financial responsibilities affecting your partner. Individuals often forget about matters such as helping siblings with university costs, taking care of the elderly, or expenses associated with supporting family members. Documenting expenses can help clarify responsibilities and eliminate disputes.
2. Seek financial advice
It is advisable for couples to consult separately with a financial planner to avoid making popular decision aimed at pleasing just one party. While enjoying the romance, particularly at the start of a relationship, couples often want to do everything together. However, an estate planning discussion in the presence of another party can be difficult. Once mutual understanding is established between the couple, a joint financial consultation becomes much more rewarding.
3. Review your financial plan
It is important for couples to review their financial portfolios after a major life event such as marriage, birth of a child, death or even the dreaded divorce. The law allows for a three month periodic adjustment of the will. If left unchanged, your finances can be negatively affected. This is also an opportunity to review financial solutions available in the market and select ones most suitable to your new circumstances.
4. Draw up a will
An updated and valid will is a starting point for any financial discussion between couples. Most couples know if they are married out of community of property, with or without accrual or understand implications of cohabitation but don’t always review their estate. A will is there to protect your estate to ensure your assets are allocated according to your wishes.
5. Understand tax implications
Leaving your entire estate to a spouse is tax efficient when weighed against allocating it to your children. It is also important to note that the first R3.5 million of your estate is not subject to tax (as per section 4A of the Estate Duty Act 45 of 1955). This amount could change in future but a portion may be allocated to a trust to sustain your legacy.
