Rita Cool
Certified financial planner
Alexforbes
Like love, money talk is in the air
Clock5 minutes

Don’t only make dinner plans with your loved one this Valentine’s Day, make a date to jointly discuss your financial affairs.

Rita Cool, a certified financial planner at Alexander Forbes Financial Planning Consultants, says couples who make separate decisions about money argue the most about it.

Cool says according to a UBS Investor Watch report, only one in four couples who truly share financial decisions feel the most confident about their future. ‘Talk about money because love sometimes gets lost if financial matters aren’t addressed,’ says Cool.

In many cultures it’s considered bad manners to discuss money. ‘If you speak to your partner about money, sometimes they may be perceived as a gold digger,’ says Cool. If you’re marrying someone, not only do you need to know what assets they have but their debts as well.

Long-term debt such as a home loan is seen as preferable over high-interest, short-term debt like retail store cards. Your future spouse’s financial standing could potentially determine the marriage regime you choose, for example, in community of property or ante-nuptial contract with or without accrual. Having a contract doesn’t mean you think you’ll get divorced, it’s simply part of sound financial planning.

Cool advises that if you’re in a relationship, consider doing these six key factors.

Plan a regular money date

Discuss your current financial situation and how your cash flow is doing by asking:

  • were there any unplanned expenses recently?
  • are there any big purchases necessary in the future?
  • how will these be paid for?
  • how have your long term plans changed or are you still on track with these plans?

These items are not only for the mundane day-to-day items but also planning for treats, holidays and potentially houses and children.

Set up a savings reserve

Financial planning isn’t just on how to pay accounts each month. Ensure you have a plan to pay debts as well as to set up a financial safety net if something happens to you or your loved ones. What if one of you gets sick or loses their job? How will that affect your combined budget?

Determine what’s yours, mine and ours

What would be the impact of holding assets in a different person’s name? For example, what happens if your spouse’s business goes under and you’re married in community of property? You’ll be liable for the loss even if you didn’t incur it.

What happens if you buy a property in one person’s name to protect an asset in the event of a business going under and you’re married with an ante-nuptial contract? What happens if all your assets are held in the other person’s name and you have to split up? Are you entitled to some of those assets?

Make it legal

You don’t have to marry someone if you’re both comfortable with each other’s situations. However, what happens if you split up or one person dies? If you’re living together, get a partnership agreement to set out what happens to assets during good times and in bad.

You might not get any of the estate if your partner doesn’t have a will that leaves assets to you. If you’re married traditionally, ensure you have registered the marriage at the court so that there can’t be a confusion about your position in the relationship in the event of death or separation. It’s very easy to deny a benefit if there are cultural differences in the interpretation of a relationship status.

Where you are you in terms of your family assets and protections?

Do you both have life cover that would protect your loved one’s income in the event of your death? Or are you covered with an income benefit to protect you if you can’t work anymore? How would such an event impact on your household finances?

If your income is dependent on an ex-spouse’s maintenance payment you can take out life cover to make sure that the income will carry on in the event of the person’s death. Are you sure that your loved one is still paying the premiums on the policy that you assume is still in place?

Keep track

  • Swap credit scores once a year to check if there might be something to be worried about or that needs to be fixed. You don’t want to realise that there’s a problem when there’s someone at your doorstep for repossession of your house.
  • Compare company benefits to see if you’re sufficiently covered for death or disability benefits. Also, discuss if you’re both saving for retirement through the company or not so that you know what’s happening with your long-term planning. Know when your loved one has cashed in a policy and for what purpose and how that affects your overall financial standing.

Ensure your love lasts and make a date with your financial planner during this month of love.

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