If you struggle with the complexity of managing your own financial affairs, juggling joint finances with your partner may seem like a nightmare. However, some couples appear to make an art of co-managing money matters.
We have a look at the nine financial habits of happy couples, and we consider some key tips you should keep in mind when sharing finances in a relationship.
Tip: Be upfront about your debt and take action today – try debt consolidation.
This is how happy couples manage their finances
Julie Macleod-Henderson, head of retail investment in Kwa-Zulu Natal at Foord Asset Management, notes that there is no single approach to harmonious money management.
“What’s important for one couple is not necessarily important for the next. However, for everyone to feel empowered when it comes to their finances, there are some crucial points that couples need to consider,” says Macleod-Henderson. To this end, she shares the following tips.
1. Shared responsibility
Couples need to have regular discussions about their finances. Even if two people are in a committed relationship, they can still be ignorant of each other’s income or financial commitments.
Perhaps one person is more financially astute and, therefore, takes the lead in financial management. There is nothing wrong with this approach in principle, but if errors result, it can lead to a breakdown in trust. Ultimately, this puts unwanted strain on the relationship.
2. Communication and transparency
Open communication around finances and mutual access to financial documentation is crucial. Should something happen to one partner, the other needs to have all information at hand to keep their finances on track.
If either partner lacks access or understanding, they are disempowered to manage financial matters on their own. Couples should ensure that both parties are up to date as to where information is stored, and have access to login details for any items stored in digital form.
3. Financial planning and budgeting
When it comes to shared financial planning and budgeting, both individuals must be involved. Couples should:
- Gather all financial information for both parties
- Discuss financial goals and expenses
- Create a combined plan to which both parties can commit
- Agree on day-to-day practicalities that will best suit the couple’s situation
Regardless of each couple’s circumstances, a well-conceived financial plan and budget that includes provision for the future is imperative to achieving long-term goals. This is where a financial planner can offer valuable guidance.
4. Roles and responsibilities
Agree on day-to-day practicalities that will suit you as a couple. This includes things like who is responsible for which monthly financial commitments, such as your bond or rent, electricity, and insurance.
Decide up front whether you want separate or joint bank accounts, or separate accounts with a shared account for combined expenses. Be clear on the usage of any funds in a shared account, and establish who is responsible for handling payments.
5. Staying the course
Once a financial plan has been drafted and agreed upon – with or without the help of a financial planner – sticking to this plan is vital to achieving the desired outcomes. There is no use in having a plan if there is no follow-through.
6. The benefit of starting early and compounding over the long term
Compound interest can make a major difference to a couple’s long-term financial success. Time is an important advantage that young people enjoy, which can allow an investment to increase markedly in value. Young people should take advantage of this.
7. Consistency and patience
Investment plans do not reach their potential overnight. Results take time and patience. A tree cannot be uprooted and replanted every two years, with the expectation that it will grow and bear fruit. The same principle applies to investments.
8. Life happens – be prepared
Life is full of unplanned events that have the potential to exert substantial, and potentially devastating, impact. Couples need to ensure that they have the right measures in place, such as life insurance, income protection, and an emergency fund.
9. Review your plan every year
Financial planning is not just a one-and-done activity. It’s important for partners to annually revisit their plan and determine whether anything needs to be adjusted. Most adjustments will happen with major life changes like the birth of a child, buying a house, or approaching retirement age.
What else should you keep in mind?
Farzana Botha, segment solutions manager at Sanlam Savings, offers the following tips that you and your partner should keep in mind when adopting the habits above.
- Be completely open about your debt. Secrets can be tremendously destructive so it’s best to work together to resolve any credit issues.
- If you are supporting a family, be honest, upfront, and know what you can afford. Where possible, look for sustainable solutions rather than creating continuous dependency, such as sponsoring education to help with employment opportunities.
- Your lifestyle aspirations and the dreams for your children and family can best be achieved when you are aligned about where you are heading. Be clear on what you are saving for – a rainy day, education, a holiday, or a house deposit – and agree, or seek help, on how much you will need to put aside. You can then decide how each of you can contribute towards your savings goals.
- If one of you is a stay-at-home parent, it’s important to consider retirement planning for both. This will ensure that your lifestyle during retirement doesn’t fall short.
- Stop arguing and start talking. Lay all the financial cards on the table. Resist judging each other, air your personal grievances, and work together, or through a financial adviser, to discover the fundamental issues that cause repetitive conflicts.
- Your obligation to your partner is to be responsible in matters dealing with finances, and honour your agreement to ensure the success of your relationship, in addition to your individual financial success.
- Allow for a degree of independence in a financial relationship. Each person should be able to have some money allocated toward their hobbies, goals, and social activities. It’s important to share, but it’s equally important to have some sense of individuality. A relationship that allows for this can lead to greater success in the long term.
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