SIMON BROWN: Till finances do us part
Money issues can wreck even the happiest relationships, especially marriages. So here are a few things to consider as you navigate the joint money minefield
Relationships and money can be fraught with challenges, but it need not be like that if we’re open about our money and goals and have good processes in place.
The first thing to consider is how you are married. In community of property means what’s yours is theirs. This includes all assets, such as savings, a home and even retirement money. But it also covers all debt, regardless what it was for or even if you knew about it.
A much better marriage contract is an antenuptial contract (ANC), which says that what’s mine is mine and what’s yours is yours and that this will continue for the duration of the marriage. You can have an ANC with accrual so that assets (and debts) after you married are jointly owned but you keep what you started with when you got married. You can actually put any detail into an ANC contract; I had a friend who stated in her ANC that any royalties she earned would be hers while everything else after marriage would be shared.
After you’ve tied the knot comes the reality of managing joint finances. In the very old days you could get a joint bank account. But they’re no longer available, which is probably a good thing given that they were often a minefield.
The first question with joint finances is: how joint? Is everything split 50/50, or do you split according to how much each partner earns? For example, if my wife earns twice what I do, does she pay two-thirds of all bills and I pay the rest?
The point is that anything is possible as long as both partners are happy with it
What about buying a home: is it split or does one partner buy the home and do they then charge rent to the other partner? It sounds extreme, but the point is that anything is possible as long as both partners are happy with it.
The trickier issues are often smaller personal expenses such as beauty products, clothing and even what car each partner drives. Here, having individual budgets for whatever you want to spend on is a good idea, while joint things — such as a holiday — can be saved for together. Retirement would be something that really should be a joint process, but again probably adjusted for the earnings of each partner.
There are several apps you can use to help you manage day-to-day expenses and calculate who has spent how much, and hence who owes what.
The last point to consider as marriage partners is your will. You will have separate wills, but they can be tied together. For example, if one partner dies first they can leave everything to the surviving partner and when the last one dies the assets are split between the heirs.
(Of course, there has to be agreement on how those assets are split and who gets what).
In a nutshell, joint finances are a minefield, but they can be done well, and if they are, you’ll avoid all sorts of complications and conflict. But start early, communicate — and keep at it.
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