It is that time of the year again – flowers are blooming, the sun is shining and many couples are preparing to walk down the aisle. Before tying the knot, however, it is important to consider how your finances will merge and what steps you should take to ensure financial stability as a couple.
Understand each other’s financial situation
Have an open and honest conversation about your financial situation. This includes understanding your income, debts, your financial goals, and your spending habits. If there are any conflicting money beliefs, this is the time to discuss them to get on the same page.
Decide on joint or separate finances
Based on the discussion around your financial situation, decide whether you would like to combine your finances once you are married or if you would prefer to keep them separate. This includes how your assets will be treated upon death or divorce, which in turn has an impact on your tax and estate planning. It is important to establish this before getting married to ensure the relevant legal documents are drafted, signed, and lodged before you say, “I do”.
Create a joint budget
Whether you choose to plan your finances separately or together, it is important to ensure your household finances can be run efficiently and fairly. Look at your combined income, expenses, debt repayments, and savings goals and determine how all of your needs will be funded, and by whom it will be funded.
Medical and risk coverage
Review your medical aid and risk policies. This may entail moving one to the other’s medical aid for better benefits or reduced costs, as well as updating beneficiary nominations to ensure you are both provided for in the event of something happening to the other. A lack of coverage should also be addressed as an unexpected event can derail both spouse’s finances if there is no coverage in place.
Updating your Wills
It is a kindness to your loved one to ensure that your Will is updated to reflect your wishes once you are married. Before doing so, however, it is important to discuss what will happen should either of you pass away. Perhaps one spouse would like to make provision for an aging parent who isn’t financially independent or the other feels strongly about donating to a specific cause. It is important to avoid any surprises and to ensure that your estate plans align and provide for the other.
Seek professional advice
Speak to a financial planner before you commit as husband and wife, whether you do so together or on your own. Having a comprehensive financial plan will not only take into consideration investment and retirement planning, but also tax and estate planning and the impact of marriage on all of these aspects is important to consider.
As a couple, it is important to enter your new chapter with confidence, and aligning your financial goals is a crucial foundation for building a secure life together.
For more information, reach out to us at info@fiscal.co.za or see www.fiscal.co.za
