Budget and communicate
TAKE THE RELATIONSHIP THREAT OUT OF MONEY MATTERS A household budget should also look at savings and investments.
This comes up a lot when, for instance, one person decides to stay home to take care of children.
Contribution to a household cannot be measured by income alone.
Remember that if one person for some or the other reason earns less than his/her partner, that you as a “household” should still make provision for both parties, this includes looking at for example life cover and retirement planning for both parties.
The key is to always ensure that both parties’ financial affairs are in order.
Also don’t fall into the trap of accumulating assets only in the one person’s name, which often happens when the one person earns more than his/her partner.
Tax wise, it makes sense to split assets. From an estate point of view it is also better to accumulate assets in both names.
Last thing you want is upon the death of the one person that the surviving person battles to pay the bills the first a couple of months while the estate of his/her partner is being wound up. Do not overplan a spectacular wedding day, make time to think about your life together.
As far as money is concerned, best to talk about it before the special day. Get a prenuptial agreement in place that sets out the starting line for your money life together, and will manage it when things go south.
Decide on a budget for joint finances. Who will pay for what. Also discuss whether there will be a joint account for all shared expenses or a 50/50 payment situation.
If a property is only registered in one name but both people contribute to paying for a property (not only the bond but running costs as well), this will affect the joint money situation.
Not discussing this before getting married is a sure recipe for conflict once the honeymoon is over. Relationships do no stay the same forever. While married, one person may decide to stop working to pursue a passion, which will immediately affect the joint finances.
Or when children are born the household spend will most likely change completely.
Plan for it, amend the budget and as with all other issues, communicate.
Try and establish a habit to talk about your financial affairs at least once a year and then go visit your financial planner annually to amend your financial plan, if needs be.
Don’t forget to keep a last will and testament up to date. So important that both parties have a will and if you have small children a last will and testament is non-negotiable, it is extremely important.
Do not postpone this thinking you are still young and it can wait. Be prepared. A household budget should not only focus on spending. Saving and investment must be an important item on the agenda.
Life policies, savings plans for children’s education and also for extravagant holidays and most importantly retirement savings must be planned for at all times. In short – budget and communicate.
The summary for a happy life together. – Moneyweb