Take Control and Communicate

Whether you’ve been together for years or just starting out, your relationship will bring its share of conflicts and complications. Your finances, individual or combined, are one of the biggest potential battlegrounds. Money is the center of your day-to-day life and it is therefore no surprise that it is the most common source of conflict in marriage and relationships. It is and will always will be a tricky terrain to navigate.

Effective communication is the most important key, but before you get there it’s important to understand where you are, where your partner is coming from, and how you can most effectively align your approaches to achieve your common goals.

Define the “take control of your finances” strategy and jointly review it on a regular basis:

  • Some couples pool all their money in joint accounts and have combined portfolios or;
  • Others keep everything separate, with individual budgets, accounts and investments or;
  • Combine the two strategies in a balanced “Yours, Mine and Ours” approach. These couples lay the groundwork by discussing which they prefer. They try each one out and reflect on which works best for them.

Couples that elects the “Yours, Mine and Ours” strategy find that they hit the right balance of individual autonomy and building a future together. They have clear individual and combined goals to support each other, especially when the joint responsibilities of kids, home loans and family life kick in.

Debt can complicate the issue, especially if one spouse enters a marriage with a high debt load. This is almost inevitable in our modern economy and you might therefore find yourself with a partner who’s paying off a large expense. Once you’re married, your spouse’s debts become your problem (practically) even if they’re not your problem legally. This is where ante nuptial contracts become so important, and where effective communication and teamwork really come to the fore.

Working towards shared financial goals, whether those include getting out of debt, saving towards a goal or building towards a happy retirement together, can go a long way to strengthening your relationship. This only works, however, if both parties have a clear picture of what those goals are, and what the strategy is for achieving them.

This point is particularly important when it comes to investing. Here you need to take an informed approach, looking at your goals within set time frames (short, medium or long term), and identifying which risk level works best for your goals. Make sure you have regular, transparent discussions about your finances and your investments, and be sure to review your investments together at least once a year.

This will help to avoid a situation where one partner has a good understanding of your combined financial situation, while the other partner, whether through disinterest or exclusion, is missing some key facts. Allowing one partner to be in total control of all the joint finances, to the exclusion of the other, is a recipe for financial disaster. Having a well-informed, mutual understanding of your current situation and future financial goals will mean that both of you know what you can and cannot afford. It also means that if something dreadful were to happen to one of you, the other would still have a clear idea of their finances.

That is why it is good to have a certified financial planner, who act as an expert in his/her field of expertise, as a neutral party to give objective sound advice about your finances.

Article by Frank Fourie