Money and marriage — important conversations you should be having
Money can be a major source of conflict in a marriage, for several reasons, but in most cases it’s because financial decisions were not discussed early on. Here’s what you should speak to your partner about before your finances become intertwined…
Prenup or no prenup?
Prenup is short for ‘prenuptial agreement’ — it’s a written contract that couples enter into before they get married. In South Africa it’s usually called an antenuptial contract.
Here in SA, you can get married in community of property or out of community of property, with or without accrual. It’s a bit confusing, so let’s break it down:
• Accrual: This refers to the increase to both your wealth and your spouse’s wealth while you’re married. What you both accrue during marriage, in other words.
• In community of property: This is the default option, and it applies automatically even if you don’t sign an antenuptial contract. It means that all your assets are merged, and each spouse has a 50% claim to everything that was brought into the marriage, plus what was gained during the marriage. Although it’s the default option, it could be risky: anything your partner does financially affects you directly. For example, if your spouse gets into a heap of debt without you knowing, you’re just as responsible for that debt as your spouse is.
• Out of community of property, without accrual: Your money and your assets, and the money and assets you gain as an individual during your marriage, always remain separate from your partner’s money and assets, even if your marriage should end.
• Out of community of property, with accrual: What was yours before the marriage stays yours, but everything you accrue during the marriage belongs equally to both of you. If you were to get a divorce, you and your partner are each entitled to the asset value that you brought into the marriage, and you split what you’ve gained together during the marriage.
Figuring out finances
It’s easy to assume you’ll each pay 50% of household expenses, school fees, rent, etc. But when one partner earns considerably more than the other, the financial burden may fall heavier on them. Payslips, assets, home loans, goals, savings and all other financial obligations need to be discussed openly to make sure the bills are paid and you’re working towards a better financial future, together.
Come clean about debt
Marrying someone with a lot of debt that you weren’t aware of can definitely put a damper on things. If one partner is heavily in debt, it might be a problem when applying for a joint home loan or planning for who will pay for what. If you’re honest about the debt you’re bringing into the marriage, you can create a strategy together to tackle that debt. It’s a difficult conversation to have, but a crucial one.
Life and financial goals
Discuss the major events that you and your partner are planning towards, such as having kids or buying a home, as well as other goals that will affect your finances. Your partner might be planning to retire early, for example, whereas you haven’t given it much thought. You might dream of owning a seaside home one day, while your partner thinks this is unnecessary.
Don’t let money ruin a good thing! Attitudes towards money and the way you save will differ. Make sure you’re on the same page now and you’ll avoid conflict later.