Financial guidelines for couples

Financial harmony important for happy unions

With Valentine’s Day approaching and romance permeating the air, some of us will be caught up in the chocolates, flowers and passionate declarations. Rightly so, but for some couples a healthy dose of financial pragmatism can also enhance this annual celebration. 

For Ester Ochse, Channel Head at FNB Financial Advisory, the delicate balance between financial guidance and relationship openness is an essential part of the service she offers clients. “Be in love and happy, but also talk about the real issues in life,” she advises. 

“Keep a level head and remember that in as much as you love someone, it is also important to accept that people come with individual experiences - financial and personal. Having an open and honest financial engagement from the outset can make your relationship stronger.” 

Couples and families often do not talk openly and honestly about their finances, notes Ochse. “People at times come with expectations about the roles their partners have to play and tend to equate money with love. Instead of causing disharmony, having difficult conversations about money can be the best Valentine’s gift you ever receive.” 

Ochse suggests the following financial guidelines for couples: 

Adopt a formal approach

A formal approach to money management is the most beneficial one. Understand the broader family tree and other financial responsibilities affecting your partner. Individuals often forget about matters such as helping siblings with university costs, taking care of the elderly, or expenses associated with supporting family members. Documenting expenses can help clarify responsibilities and eliminate disputes. 

Seek financial advice

It is advisable for couples to consult separately with a financial planner to avoid making popular decision aimed at pleasing just one party. While enjoying the romance, particularly at the start of a relationship, couples often want to do everything together. However, an estate planning discussion in the presence of another party can be difficult. Once mutual understanding is established between the couple, a joint financial consultation becomes much more rewarding. 

Review your financial plan

It is important for couples to review their financial portfolios after a major life event such as marriage, birth of a child, death or even the dreaded divorce. The law allows for a three month periodic adjustment of the will. If left unchanged, your finances can be negatively affected. This is also an opportunity to review financial solutions available in the market and select ones most suitable to your new circumstances. 

Draw up a will

An updated and valid will is a starting point for any financial discussion between couples.  Most couples know if they are married out of community of property, with or without accrual or understand implications of cohabitation but don’t always review their estate. A will is there to protect your estate to ensure your assets are allocated according to your wishes.

Understand tax implications

Leaving your entire estate to a spouse is tax efficient when weighed against allocating it to your children. It is also important to note that the first R3.5 million of your estate is not subject to tax (as per section 4A of the Estate Duty Act 45 of 1955). This amount could change in future but a portion may be allocated to a trust to sustain your legacy. 

Ochse concludes that couples should not underestimate the value of money on their relationships. “Financial fitness and open conversations are essential to a long and happy union.”