I value the quote that says, “A healthy relationship is one where two independent people just make a deal that they will help make the other person the best version of themselves”.
So how would we achieve this goal when it comes to managing our personal and joint finances as a couple?
Unfortunately, women have historically given up control of their finances after marriage. I always recommend that women empower themselves and aim to remain financially independent, even in a relationship. Financial independence is the ability to pay for your own living expenses with your income, without having to be dependent on another person.
Remember the day that you promised to cherish one another for richer or for poorer? Yet many couples avoid talking about finances which may lead to conflict and in a worst-case scenario could end your ‘happily ever after’.
Commit to honesty and transparency
The first step is to have an open and honest discussion with your partner about your finances, whatever circumstances you may find yourself in. Keep in mind that your habits and attitudes towards money could differ a lot depending on your respective childhoods. Once you understand how you both approach money management, it will help you to determine the best way to manage your financial journey together. You should also address tricky questions like credit score, any debt, savings and salary.
Financial goals and priorities
Having the money discussion with your partner includes talking about your financial goals. Joint financial goals will give you something concrete to work towards as a couple.
Questions like:
1. Do you want a travel fund for that special holiday?
2. Do you want to buy a home in five or 10 years?
3. When would you like to retire? etc.
Having savings goals is important because it helps you to decide how much money you both need to save and where that money is best invested. If, for example, you are planning to buy a property in two years’ time, it would be wise to invest this money in an accessible savings- or money market account. This way, you won’t have to wait for the market to turn in your favour when your dream house presents itself.
For long-term goals, like retirement, you might want to consider a more aggressive approach by investing most of your money in equities. This will give your money the opportunity to grow over the long term, helping you to reach your goals.
Budget
Once you’ve decided on your financial goals, both individually and as a couple, and you’ve identified your sources of income, you need to summarise your personal and joint expenses. Decide how you will split your expenses and remember to set spending limits and savings expectations. Always keep your own separate bank account but consider opening a joint account for shared expenses.
Plan for emergencies
An emergency fund is a bank account with money set aside to cover the financial surprises life throws your way. Loss of employment, medical emergencies and facing a pandemic are examples of these unexpected events that can be stressful and costly. A good goal is to save three to six months’ worth of the expenses that you each are responsible for.
Structure your financial plan
We all know that you need a plan to build a house. It is equally important to have a financial plan if you want to reach your personal and joint financial goals. A financial needs analysis (FNA) is an overview of your current financial situation, your future financial needs, and goals and what you need to do to reach these goals. This includes retirement and estate planning as well as risk insurance such as death, disability, and critical illness cover.
Getting married means stepping up your retirement efforts. You each need your own individual retirement fund and you need to contribute to them regularly.
This is also a good time to think about drawing up a will. A will ensures your money and other assets go to the right people and that your wishes are carried out.
Set for success
Tackling your finances as a couple can help you to avoid quibbles about money and to reach common goals. Getting started isn’t always easy. A qualified financial adviser can help you to build a financial plan that works for you, so you can feel confident that you’re on the right track.
