Gavin Wright, director of wealth management at Moore Stephens, has some financial pointers for soon-to-be-wed couples
Q My fiancé and I are anxious about fusing our finances into one after we’re married.
How do we reconcile our individual expenses, debts and savings as a couple?
If we have joint expenses and one of us is injured or dies, would the other one be burdened with their debt?
How do we manage our money well once we’re married?
Money plays a big role in any marriage and financial stress, when not dealt with properly,can cause irreparable harm in a partnership.It’s therefore important to discuss how you’ll manage your finances before you tie the knot. Both of you need to be honest and fair, in order to reach an agreement around matters such as savings and debt. Any monetary involvement from either of your parents, such as an inheritance or loan, needs to be discussed openly to avoid any future misunderstandings. Next, work out a joint budget that will help you to live within your means. Chat about how much each partner should contribute to household expenses, such as water, electricity, food and transport, each month. Deposit this amount into one account that can be accessed by both of you to cover these costs. Individual accounts are still useful for personal spending and saving.
Importantly, don’t make any financial transactions from either account without first meeting your basic monthly repayments, such as your bond or rent. Another financial matter couples need to consider is the interest rate on their debt – be it on a credit card or the repayment of a bond or car. If the initial rate on the repayment is low, it may increase in coming months; if it’s high, it could decrease over time. Either way, keep your instalments constant and put as much money as you can towards them so you can pay off your debt as soon as possible. You should repay the full amount outstanding on your credit card each month, to avoid the high interest rate, and the risk of falling into debt. An area many couples often neglect is saving for something special, such as a holiday, or – more importantly – retirement.
If you are 30 this year and want to retire at 65, you need to save roughly 12% of your salary each month for a comfortable retirement. If you wait another 10 years and only start saving at 40, you will have to save 21% of your salary. Speak to an independent financial advisor, who will help you understand how to save properly between the two of you. Your will is another area that becomes particularly relevant in a marriage. It stipulates how your assets should be dealt with on your death. In the event of one partner passing away, the other may be left to repay debts by themselves, which can be a huge financial burden to shoulder alone. For this reason, life insurance or assurance (the differences are technical – a financial advisor is best suited to explain the sort of policy you will need) is another financial aspect every couple should consider.
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