MONEY, HONEY!

Self-proclaimed ‘money dork’ and author of How to Manage Your Money Like a F*cking Grownup Sam Beckbessinger tackles your burning questions.

Money guru Sam Beckbessinger answers your money questions

QMy mom told me to set up a f-ck-off fund

– a secret bank account, in case my marriage goes south. But I am married in community of property – is it even possible?

A: Your mom’s right (sigh, aren’t they always). Having a savings account that you can access in an emergency and that your spouse doesn’t have access to is a good idea.

Legally, your spouse is entitled to half of all of your assets, including what’s in that emergency fund. But they’d only be able to claim it once the divorce is wrapped up, which usually takes several months. That fund is there for the first few days and weeks after something goes wrong (and of course, we hope it never will), to rent yourself a flat or buy yourself a plane ticket if you just need to remove yourself from a situation in a hurry.

Make sure that it’s a savings account, not a line of credit, as you’re technically not allowed to open credit without your spouse’s approval if you are married in community of property. Plus, a credit card would show up on any credit checks, so your spouse would definitely find out about it.

Hopefully you’ll never need to use this money, but if you ever do, you’ll be grateful for your mom’s advice. The only thing I don’t agree with your mom about is that the account should be a secret: you can keep all the account information private so that your spouse can’t access it, but I do think you should tell them about it, and encourage them to open one too.

Q: How big should an emergency savings fund be? I’ve heard, anything from two to nine months. Also, how much of my income should I be saving?

A: That depends…

• Do you have an irregular income?

• Do you have a home loan?

• Do you have dependants?

• Would it take you more than a couple of months to find a new job if you lost your current one?

If your answer to any of these questions is yes, then aim for six months’ worth of expenses. If the answer to all of those questions is no, then three months’ is fine.

If you have investments that you can liquidate easily, like shares, then you can tend more towards three months.

It’s best to break this goal down into sub-goals: start with just one month’s expenses – that’s already a stretch for many people! Then build it up over time.

As to how much you should be saving… that’s an impossible question! You should save however much will optimise your happiness. For some, that means saving just enough to make sure they can support themselves in times when they can’t work. For others, it means saving 50 percent of each paycheque so they can quit their job and follow their dream of opening a surf shop in Mozambique.

As a baseline, make sure you’re saving at least enough for retirement and emergencies. For most, that number ends up being about 20 percent of their income, but there are many variables. Talk to a professional to work out what this number is for you.

Q: My friend recently asked to borrow money from me. He makes decent money but is a bit of a reckless spender. That said, he’s a good friend and I’d like to help. What are your thoughts on lending money to friends and family?

A: I don’t believe in lending money to friends and family. I believe in giving money, and only when you can afford to and truly want to. That’s because I value relationships more than I value money, and lending money can be the fastest way to lose both.

Good personal relationships aren’t transactional. That’s why you don’t pay your spouse for hugs (right?), even though you value those hugs a lot. Paying them for hugs would fundamentally change the nature of your relationship. And it would be super-weird.

Lending money to your friend could introduce new feelings into your friendship: your friend might feel guilty if they can’t pay you back right away; you might judge them if you see them having fun spending the money rather than paying you back immediately, or you might feel exploited by them. Any of these feelings could strangle your relationship with them. It’s just not worth it. You already think your friend is a reckless spender – trust that instinct and assume that you’ll never get the money back. Now ask yourself: do you still want to give them the money? If you do, and you can afford it, then make it clear it’s a gift – and give it wholeheartedly. ✤

‘Lending money to your friend could introduce new feelings into your friendship.’