When getting married, couples may not always think about the financial journey that they will be embarking on. According to a study conducted by TransUnion in the United States it was revealed that the division of financial responsibilities within a relationship can lead to problems.
Before marriage it is important to have an understanding of your partner’s financial situation (they could be bringing bad debt into the union), and to discuss how you will deal with financial issues as a couple. However, according to the TransUnion study, this does not happen.
One of the issues that couples often overlook before getting married is budgeting and checking their future spouse’s and their own credit scores.
Salem Dyafta, brand manager of consumer at TransUnion in South Africa said: “This can be a significant oversight. In order to smoothly merge two separate financial lives, it’s important for couples to discuss financial goals, debt payments and overall expectations before getting married.”
The study found that even when couples have made financial plans prior to marriage or plan on making these decision after the wedding, roles often change after marriage. The results revealed that one in three married respondents made budgeting decisions on their own.
Furthermore, the study noted that only 25% of respondents planned to check their partner’s credit score before marriage, while 27% of engaged respondents and 30% of married respondents said that they do not monitor their own credit scores. It is important to monitor your credit score as it is an indicator of your financial situation, and a bad credit score will prevent you from purchasing a house or car.
“Credit scores are affected by a variety of factors, and can change often. So it’s important that couples regularly check each of their credit reports, especially as they plan big life events like weddings and buying a first home,” highlighted Dyafta.
According to TransUnion in South Africa, the same or possibly worse results could be found in South Africa.
Tips to help couples merge their financial lives
When you are getting married, you are not only going on a life journey together, you are going on a financial journey as well. Here are some tips to help make the journey smoother:
- Discuss debt before marriage: Once married, your combined debt can have an impact on your credit worthiness as a couple and prevent you from buying a house or any other item you may want to acquire as a couple. “It’s important to openly reveal and discuss current debts together before getting married,” noted TransUnion.
- Know your credit ratings: It is important that you openly discuss your finances as a couple and are both aware of yours and your partner’s credit ratings. This will make it clear what your financial situation as a couple is, and help to prevent future disagreements.
- Be on the same track: Not only is it important to discuss financial matters together, it is also important that you agree on the best way to deal with money. For example, if you are a saver but your partner is a spender, you will need to find a financial solution that you both agree on and are able to follow through on.
- Draw up a budget together: As a couple you need to determine what all your expenses are and decide who will be responsible for paying for what.
- Past behaviour indicates future behaviour: If your partner lives in debt and has bad money management skills, they are unlikely to suddenly change their financial behaviour once you are married.
- Long term planning: As a newly married or engaged couple you may not want to think about the relationship not lasting. But is it important to make sure that you will be financially secure should the married end in divorce. You will need to determine how property and items will be divided. In addition to this, long term planning also includes planning for children and the expenses that will accompany that, as well as planning for retirement and making sure that you will be financial secure when you are no longer working. These are topics that you will need to discuss with your partner and agree on what your goals and plans for the future are.