From A-Z of Personal Finance by
individuals merge all their worldly goods, there are many things to consider.
After the excitement of the wedding ceremonies, it is time to face your
financial future together. Have you effected your name change on your
documents? Will you have joint or separate accounts? How will you manage your
investments? Have you updated your insurance policies to reflect your new
Kemi is a lawyer. She works in a Lagos-based law firm. She recently met
32-year old Emeka who recently returned to Nigeria after having worked in the
United States for 4 years. He is into "oil and gas”. They had a whirlwind
engagement and a lavish wedding. Nothing was left to chance in the wedding
preparations; the wedding planner considered even the minutest detail. However,
there was one crucial piece of planning that they completely overlooked; that
was planning for their financial future together.
booked a wonderful honeymoon to a five-star resort in Dubai. The first sign of
trouble was when his card was declined in a bookstore at the airport; for the
rest of the holiday, Kemi had to pay for everything with her card. Sadly, Emeka
hadn’t disclosed that he owed $35,000 on his credit card, had not paid rent
which was due on his Lagos apartment and had just been given a quit notice by
his landlord, car payments on his jeep had lapsed for three months so he faced
repossession, and his company had a non-performing loan with a local bank. The
honeymoon was over.
What is your attitude to money?
that financial problems are the single biggest cause of contention in marriage.
Talking about money can be a little awkward in the early stages of a
relationship but it is important to discuss finances and try to resolve
conflicting attitudes towards money; shying away from the issue will only lead
to misunderstandings later on.
have different attitudes to money that are shaped by our earliest experiences,
and formed long before we meet our partners. Such experiences can influence
your spending, saving and investing habits, need for security, ability to bear
risk, attitudes towards debt and so on. Naturally, attitudes will change
throughout the various stages of life and with the numerous opportunities or
setbacks that life tends to throw one's way.
you consider to be an acceptable level of financial risk. One of you may be
prepared to bet everything, including your home for the prospect of supernormal
profit whilst the other might not be able to sleep at night when the market is
Create a budget
where you stand at the start of your life together is a good way to begin the
process of building a viable financial future together. Create a comprehensive
list of your financial assets and liabilities and keep good records of all your
investments and debts. Both parties should have copies of the documentation in
case of an emergency.
Deal with debt
Be honest and
open about both the positive and negative aspects of your financial history.
How much debt do you have individually? Many people don't discover the extent
of their spouse's financial obligations until they are married. Debt brought
into marriage can be a major source of strife if not well handled. Full
disclosure is important so that you can plan together and there are no
surprises down the road.
that once you are married, your debt is considered together; whilst you may not
be legally responsible for any credit taken out in your spouse's name, it could
affect your credit and therefore your eligibility for loans such as a car loan
or a mortgage. Even if the debt may have been incurred before the marriage or
afterwards, try to deal with the debt together and seek to bring it under
Set goals together
thought out plan is a key ingredient for a successful financial future. Don’t
assume that your fiancé(e) knows what you envision for the future. Ideally,
after you have discussed where you each are financially and before you walk
down the aisle, discuss your expectations, share your ambitions and set SMART
short and long-term goals. They should be Specific, Measurable, Achievable,
Realistic, and Time bound.
Where do you
see yourselves in 10, 20, 30 years? Will you both work, or will one of you focus
less on career and more on family? Is buying a house an immediate priority?
When would you like to retire? You don't have to agree on all your goals, but
at least you can acknowledge and appreciate your partner’s aspirations and
dreams. Where there are differences, try to find some common ground and come up
with a workable compromise that you both can live with. Remember that your
individual goals are just as important as your joint ones.
Who pays for what?
Dele and Tope
Thomas have been married for 11 years. Tope has a passion for designer labels
and has always spent all that she earns whilst Dele is a conscientious saver
who craves the security of a financial cushion; this caused much strain in the
early years of their marriage. They recently established a family budget, which
has helped them to set clear spending guidelines. They prefer to maintain a
degree of financial independence so each have separate accounts for their
incomes and a joint account for household expenses to which they both contribute
in proportion to their incomes.
In the new
arrangement, Dele pays the mortgage and school fees whilst Tope takes care of
utility bills, staff salaries and food. Significant spending decisions are made
jointly; they have agreed on a set limit for when an expense is too big to be
considered by just one party. In addition, each has agreed to save a certain
amount each month, in a balanced fund which increases as their salaries
increase. Beyond this, each of them can do whatever they want with the remainder
of their money and do not have to account for it.
Dele and Tope
revisit their financial goals quarterly; this helps them to stay abreast of
things both individually as well as in the context of their joint finances.
Because they have broadly stuck to these terms, they have fewer arguments about
spouse doesn’t share your financial philosophy, don’t give up hope. Of course
it’s that much easier when you have similar outlooks on financial matters, or
at the very least are able to find some middle ground. Specific arrangements
will vary, as what is right for one couple may not be right for another. The
key is to determine the best approach for you. Dealt with properly, however,
considering money matters together provides a great opportunity not only for
strengthening a relationship but also for fulfilling mutual goals with a sense
of direction and purpose.
that there is no one size fits all when it comes to finances in relationships
but with careful planning and clear communication, you can avoid many
frustrating conversations. Even the best system is not always appropriate so be
prepared to modify your system as your relationship and financial situation
evolves; if one option doesn’t work, try another.
Akinkugbe has extensive experience in private wealth management. Through
her platforms, she seeks to empower people regarding their finances and offers
frank, practical insights to create a greater awareness and understanding of
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