When two people enter into a partnership through dating, marriage, co-habiting, etc, usually there’s an enormous amount of effort spent on finding commonalities. However, this process often neglects the financial status and long-term goals of each member.
For instance, your partner may want to buy a luxury car while you want to save for an early retirement. What do you do if you find yourself in this situation?
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Janine Horn, financial planner at Momentum Financial Planning, offers a number of practical steps that couples can take.
Share your goals
You can start, Horn says, by sharing your goals and experiences, and expectations. Discern between how you view “wants” and “needs” and why certain aspects, such as saving, are important to you.
“The idea is to converse in a way that gets your point across in a kind and easy manner.
Savings are non-negotiable and must be included in each person’s budget. You cannot build a sound financial foundation without it,” Horn says.
Have an in-depth conversation about money
The more you talk about finances, and the more open you are willing to be, the more of a habit these discussions will become.
“Some of us were raised in households that battled financially, had a single parent raise us, perhaps had multiple family dependencies and a single income. It may well be that few, if any, financial conversations were had. We may well have adopted those traits, including a reluctance to discuss finances.
"Having an in-depth discussion around these matters will allow you to see what may lie underneath as a future potential behavioural trait, in you, and the other person,” Horn points out.
Sign a financial agreement
Horn suggests that entering into a financial contract with your partner can help with mutual adherence.
“Financial speed dating would be a great thing when starting a relationship, with a financial contract formed should the process show financial compatibility.
"Discuss behaviour, goals, lived experiences, family patterns, budget, and discuss who is responsible for payments. Work out expected household contributions, and try to encourage the same percentage of savings. This contract, like any, must be adhered to and will allow you to sing from the same hymn sheet,” Horn suggests.
Explore different marriage regimes
Horn says you must understand the types of marital contracts and their differences, and choose the one that is suitable for your financial goals.
“One common type is the community of property (COP) marital regime, and is probably considered the most dangerous financially. Under this agreement, you are legally held jointly responsible for your partner’s financial decisions and debt. Alternative regimes, such as an antenuptial agreement, will offer you protection. Your assets can be excluded from the marital contract. A co-habiting or common-law partnership is also a viable contract,” Horn says.
Horn says you must raise your financial game.
“Become financially literate to the level that allows you to be money smart and financially astute,” she says.
She says, should you find your partner lacks this, encourage them to go on a course to empower them, or share information with them.
“This may leave you questioning your financial compatibility, but I urge you to be resolute in your standards and remain steadfast in upping your mutual game. You will soon realise that either the financial contract needs to be redrafted, or that you may want to separate your finances and continue your upward trajectory on your own,” says Horn.
It is vital to have similar goals and a shared financial load or contribution. One of the partners might feel inferior if the incomes are different. However, if the contract was agreed to and the expectations are met, this can be quite levelling. Communicating your concerns should be done with money, as you would with any other concern.
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