Getting intimate with your partner’s finances
It is not uncommon for couples who decide to live together to have a romantic idea about how their f i nances will miraculously fi x themselves now that they have someone to share half of their monthly expenses with. But do not be fooled, the rosy picture may soon sour if you don’t have a conversation about finances before the move.
Financial education consultant Iona Minton says that one of the most i mportant t ips for li v i ng together before marriage is to get the awkward c onversat i on out of the way by discussing whether there is likely to be a marriage down the line or not.
“Don’t move in unless both of you are serious about living together. Living together should not be seen as a trial run for marriage. Look at it as a preparation for marriage because both of you are already prepared to commit to each other,” she says.
GET INTIMATE WITH FINANCES
Head of FNB consumer education Eunice Sibiya says a l ack of open communication about each other’s current f inancial status may contribute to couples struggling to make ends meet each month.
Whether you are new to having moved in together or you have lived together for quite sometime – it all starts with a deliberate seated conversation, she says.
“With the decision to move in together comes a whole lot of responsibilities a nd one of t hem i s bei ng tr a nspa r ent a bout your f i nancial position as you are now dually responsible for the upkeep of a household,” says Sibiya. “While you don’t have to share your bank statements with each other, if you so prefer, share your budgets so that your partner is aware of what you are able to contribute and how much room you have for unforeseen expenses and emergencies.”
Minton says you only really get to know who your partner is after getting intimate with their f inances.
“It is only when you live with someone and start sharing the f inancial and household responsibilities that you get a true ref lection of their f inancial and emotional intelligence. What if you have maintained an impeccable credit record, resorting to pilchards and toast to make sure you have enough to pay your clothing accounts, but you realise that your ‘soon-to-be’ housemate is not nearly as careful as you? They need to come clean about their debt levels,” she says.
PAYING RENT OR CONTRIBUTING TO THE BOND COSTS
If you, as a couple, are still looking for a place to rent or buy together you need to ensure each partner can afford to meet their share of the rent or a monthly bond instalment. Minton says if your partner already owns the home that you move into, the rent you pay should be accrued to you if you decide to leave. “Many individuals fall into the trap of paying for the groceries, phone bill and electricity while their partner pays off the bond. If the house belongs to the partner, they get the benefit of having their bond paid off, while the other has nothing to show for their expenditure. A way of safeguarding yourself is to work out how much you may be saving by l i ving with your partner and investing it. There are economies of scale when sharing accommodation, so take advantage of it to save and grow your net worth.”
TAKE RESPONSIBILITY FOR YOUR OWN DEBT
Sibiya says cohabiting partners should remember to stick to the decisions they have made regarding the management of their f inances.
“You need to leave room for a month where one partner might need another partner’s help, but too much f lexibility and r ule bending in your f inancial ground r ules can lead to f i nancial problems such as over-indebtedness, inability to stick to individual budgets and, most strenuous on a relationship, money f ights.”
She says when it comes to debt, it is advisable that each party manages their debt separately and continues to repay their monthly minimum instalments individually. But what happens if those are part of your shared bills as a couple with an integrated life?
Minton says it is important to share the f inancial responsibility. She says paying bills should not be left entirely to one partner.
“It may be easier to transfer a lump sum every month for your share, but what if your partner has a shopping addiction and fails to pay important bills? You could be cleaning up the mess. Pay your share of t he bi ll s personally and keep copies of t he receipts. If you pay online then forward the confirmations to each other.”
MAKE PROVISION FOR ILLNESS/ EMERGENCIES
Sometimes l ife happens and il l ness or other unforeseen occurrences hit the one partner, or both at the same time. The cohabiting couple should also look at important risk cover like medical aid, life insurance and income protection, so the burden is not placed on the healthy partner in case one of you gets il l, says Minton. “Medical expenses can wipe out savings and plunge one into debt. If you are buying a home together l i fe insurance will ensure that the other person gets the house and will not have to move due to affordability issues.”
“WHAT IF YOU HAVE MAINTAINED AN IMPECCABLE CREDIT RECORD, RESORTING TO PILCHARDS AND TOAST TO MAKE SURE YOU HAVE ENOUGH TO PAY YOUR CLOTHING ACCOUNTS, BUT YOU REALISE THAT YOUR ‘SOON-TO-BE’ HOUSEMATE IS NOT NEARLY AS CAREFUL AS YOU?”