By Motlagae Konyana
It is said that more than half of marriage proposals happen on Valentine’s Day. It is also common knowledge that unresolved or unknown financial matters can contribute to the break up of your relationship with bae. Here are some mistakes that you should avoid when you are in a commited relationship.
Not knowing your partner’s credit status (and marrying him in community of property)
When you decide to get married, it is pivotal to know your partner’s credit status before entering into a marriage. This is because the legal framework in which you get married will definitely have a major impact on your financial planning going forward. So it’s imperative that women understand the basic implications of their marital status.
The couple intending to marry in community of property needs to understand that all their assets and liabilities from before and after they get married fall into a single joint estate, in which they have an equal share. So, when married in community of property, in order to deal with any of the assets in any way, the couple must consent to this together.
This is also included with either person’s life insurance. When a woman is married in community of property, upon the death of her partner the entire estate will be frozen because it is one joint estate, the appointed executor will have to divide and allocate her 50%. Until the executor has done this, she may not have access to any of the assets in the estate.
Even if you are the beneficiary of your husband’s the entire estate, you will need access to alternative funds until the estate is unfrozen. Only life insurance is payable to you as the beneficiary but both spouses have this need, as there is no certainty as to who will die first.
Not having an honest discussion about each other’s debt
Debt is one of the biggest financial challenges couples need to deal with and be honest about. It could be worse for new couples planning to commit to a long-term relationship if one person brings in a lot of debt into the relationship, which the other partner may need to help settle before they start building their wealth. Debt could be a legal issue if you marry in community of property. So to avoid the legal battles have an honest conversation about debt and have a plan as to how you would minimise the debt between the two of you to ensure that your relationship doesn’t breakdown because of debt.
Burying your head in the sand with the household finances
Even though women have worked hard in their careers and their finances there is still an alarming number of us who still prefer to hand over their financial responsibilities to their male partners. The problem with this approach is that women live longer, earn less and take more breaks from the workplace to care for children than their men.
Women also oversee a large number of responsibilities whilst easily running the household. It only makes sense then that women should actively take part in finances. One of the major obstacles women face is a lack of retirement planning and preparedness.
Borrowing his family money in the name of loving him and wanting to be liked
Borrowing money from a friend can be a recipe for disaster! Its even worse if you lend money to your partner’s relatives! Be very sure that the agreement is recorded in writing – have a contract if needs be – clearly stating the terms and conditions. When will the loan be repaid? Will it have to be repaid in monthly instalments? Is it just the capital that will be repaid? It’s difficult to have this conversation with your family members or even your partner but what happens if he dies before it has been repaid?
A written agreement might eliminate conflict. It will be useful should other family members get involved and question the legitimacy of the agreement.
Buying big purchases together when you’re unmarried
When you choose to cohabit instead of formalising your relationship by means of marriage, you forfeit the protection that marriage offers you. If the relationship should break down and assets have to be divided, it can turn into a major war. Often, the ownership of the contested assets may come down to who actually paid for them. It is a good idea to enter into a domestic partnership agreement to regulate what will happen to the assets acquired during the relationship should it come to an end. This agreement should be drafted by an attorney.
Joint bank accounts. Are they a good idea?
A joint bank account has its advantages and disadvantages, however it’s not necessarily suited to all couples. Although you are committed to your life partner, ensure that you consider the various factors and make an informed decision that is best suited to your needs. Stuck on the decision? Get a financial advisor to help out.
Having a joint account can, in many ways, be practical. For example, a joint account makes it easier to pay joint bills and shared household expenses or for that baecation trip to Bali. It also means that everything is shared and one partner isn’t always left paying.
Women need to take their finances far more seriously and save more. In fact, women should be in control of household finances and investments because it affects them most. Because so many women are still dependent on their spouses for financial support, they have an obligation and right to know that adequate provision is in place should the principal bread winner die or become disabled. Women also have to take control of their own retirement planning. Yet many women still depend on their partners to provide for their retirement and financial security.
Ensure that you avoid making these money mistakes in your relationship.