Oran Hall | Money management, an important element of successful marriage
ADVISORY COLUMN: PERSONAL FINANCIAL ADVISER
Money is serious business; so much so, it makes and breaks marriages and other relationships. In fact, money, or the lack of it, is one of the leading causes of divorce.
Understanding the financial side of your spouse before committing to marriage, therefore, could prove important in ensuring that it works, and it is not necessarily too late to get to the drawing board if you are already married. Doing so could help to make it better.
Your money values form the basis of your financial decisions. They guide in the choice of your earning and spending decisions. They reflect what you consider to be most important. Personal money values are determined by your past experiences with money, particularly those in your home during your growing-up years, and your observations of how your family members related to money as you grew up.
The church, school, community, the media and your friends also contribute to your money values and attitudes to varying degrees. It is important to align your personal values with your finances and to know well the financial side of your co-spender.
People differ in how they acquire, use and manage money. In terms of acquisition, at one extreme is the avoidant who has a relationship of fear with money and is risk averse; and, at the other end, is the insatiable user of money driven by greed and a penchant for taking risk.
In terms of the use of money, at one end is the person driven by the desire to save to the point of being miserly, as opposed to the compulsive over spender, or spendthrift. With regard to the management of money, there is the compulsive micro manager, from paying bills to investing, as opposed to the chaotic individual who is disorganised or is prone to procrastinate, whether it be paying bills or investing.
Whether it is a case of love being blind or love refusing to see, these matters should not be overlooked if they come to light. Be observant and listen carefully in your interactions.
Before getting married, it is important to ask searching questions. Perhaps you may be seen as intrusive, even going too far, but if you intend to be another person’s life partner, you do not want to make that commitment blindly.
Is it too unreasonable to know the credit score and the level of debt of your intended? Just think about it: will these not affect you when you form your family unit? Should you not also explore if the one you plan to settle with has dreams of you helping to address debt you have no share in after your new family unit has been established?
Do you think it is important for both of you to say what your income is, how you will approach saving and investing and how you will approach realising the goals you have both set?
You may want to see if your personal goals clash with the goals of your partner and the goals you hope to help set for the family unit.
You may also want to know how family expenses will be taken care of. Will you join all of your resources together and address your expenses jointly, or will you decide what portion of each partner’s income will be contributed to the family unit’s savings, investment and spending? And what level of debt is acceptable to the family after considering each partner’s views?
Consider also if you will hold joint accounts or individual accounts and how you will manage these in a transparent way. If you opt to have joint accounts and generally carry out financial operations jointly, how much will be allocated for the discretionary use of each partner without any requirement to account for the use of such funds?
When both parties have different attitudes to risk, it is important to agree how to invest the resources of the family unit. Perhaps the partners could individually invest a set portion of the funds of the family unit as they see fit, or they could make joint decisions after careful deliberation. And just in case one partner, or both, receives a windfall, how is it to be treated?
Although it seems logical for both partners to join in making financial and other decisions, it is important to establish who is to function as the finance minister of the family to ensure more responsible, but collaborative, management of the financial resources of the family.
What about children? They are an important financial consideration. Determine how many you want to have, how soon, how they will be cared for and how their educational needs will be provided for.
Getting the financial aspect of your marriage right will not guarantee life will be happy ever after, but it should help.
Oran A. Hall, principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.