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PKF Australia

Accountants and Business Advisers

How to marry for money

How to marry for money

Posted 08 Sep 16 by Simon Lally

Article from insights.bt.com.au

The word ‘fiancé’ and the word ‘finance’ are very similar. Apart from an additional letter, they’re basically identical words, and rightly so, because before you walk down the aisle with someone it’s a very good idea that you are on the same page financially.

Richer and poorer

Why? Well arguing about money is the top predictor of divorce according to a study by Sonya Britt, a US state university researcher. Interestingly this is regardless of a couple’s financial situation. So the insight seems to be, if your money saving and spending styles are radically different, or you can’t agree about them, your relationship might be on rocky ground.

What’s yours is mine

Plus, marriage is actually one of the biggest financial decisions you will make, because your joint earning capacity, what you each bring financially to the relationship and your joint financial goals are going to determine a great deal of your financial future. So before you commit, here are four important money issues to deal with.

1. Relationship debt

These days, most people carry some form of debt around with them and before you enter into a marriage or long-term commitment, it’s important to have an open and frank discussion about your situation. Will you share the burden of paying off the debt? Does one of you have a debt that will adversely affect the chances of securing a home loan? What measures do you have in place to ensure the debts are paid off?

While questions about debt might not seem very romantic, they’re an important tool in understanding your future spouse’s spending habits and attitude to money. Vanessa Tripodi from CreditCards.com recommends asking about a person’s total debt, as well as what the debt is from.

“This will tell you why your partner is in debt and whether they have bad financial habits, or their debt is due to a one-off emergency charge they haven’t been able to shift yet,” she writes.

2. Your financial roles

Financial planner Gerry Linehan, also supports finding out what each other’s money habits are like.

“Who is the best money manager out of the two of you? Generally one is better than the other,” he says. “Consider the better half managing the money, especially if you plan to get a mortgage anytime soon.”

Belinda, 30, recently became engaged when her partner of 5 years, Matt, popped the question in Paris. She agrees wholeheartedly that each person should focus on their financial strengths.

“I am really good at preparing a budget and keeping track of our finances” she explains, “however I’m also quite good at spending too much as well, while Matt is better at saving but never knows exactly where we’re up to in our financial plans.”

3. To merge or not to merge?

 Another important discussion to have before getting married concerns what will happen to your individual finances once you’ve said ‘I do’.

“We have kept our finances separate for the last five years of the relationship and will continue to do so going forward into marriage” says Belinda. “We both agree that keeping our financial independence is vital in keeping the dynamic of the relationship fair and strong. However once we start a family, we’ll have to restructure everything quite dramatically and join all our income and debts.”

4. Get clear on your joint financial goals

If you are both saving and working towards the same goals then you are more likely to be successful. But if one of you wants to travel for a couple of years and the other wants to save for a house deposit, you might become unstuck. Really get clear what both of your hopes and dreams are and how you plan to get there before you tie the knot.

Finally if you are planning to get married, consider going to talk with a Financial Adviser. It could be the wisest start to your financial future happiness.


Disclaimer

Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.


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