How to become financially compatible

Last updated on 5th December, 2018 at 02:38 pm

Money doesn’t guarantee happiness and the lack of it doesn’t spell doom, but when partners are financially incompatible major problems can arise.

Ask most people what they think is the main cause of divorce and they’ll answer infidelity and finances. And they’d be right. Both are major reasons that relationships break down. But when it comes to finances, conflict arises less than we might imagine over the lack of money and more because of the lack of a shared financial outlook. Talking about money is seldom easy, but it’s best to be frank about money habits as early as possible, says Danelle van Heerde, Head of Advice Processes and Tools at Sanlam Personal Finance. “It isn’t necessary to share exactly how much each earns or has saved early in a relationship, but it is important to have open discussions about money values and attitudes. Don’t just ask how much each person has available to spend on entertainment, but also about how each prioritises spending in their budget, how they use debt and whether savings are important,” she explains.  

Make time to talk

While it’s best to start early, it’s never too late in a relationship to initiate talks. It’s important to plan the right time to talk. Don’t begin discussions after an argument or when either partner is tired or stressed. Start by saying, “We’ve never had this conversation and we should. It’s important that we plan for today and for our future.” It can be a good idea to admit to a money mistake you’ve made so that your partner doesn’t feel you’re initiating debate because of some perceived error on his or her part. Only discuss issues pertinent to your relationship. It’s especially important to be open and honest, especially if your views are not the same. “Agreeing how to manage these differences makes it possible for a couple with different values and attitudes to manage their finances successfully,” says Van Heerde. For example, consider letting the person who is good with budgeting or savings handle them for both of you. “The biggest risk is one person hiding spending or debt, but as long as the other partner knows what the financial situation is and is part of agreeing to financial priorities and making financial decisions, it can work well to have one partner handle the money.”  

So, how do you begin?

According to Van Heerde, it’s easiest to open discussions around the monthly budget and how much each contributes. “If either partner is unhappy about how much they’re contributing, this will cause issues in the relationship. Agree on how much each partner should contribute taking into account what each earns, as well as their personal monthly expenses.” If you have conflicting ideas on how to prioritise income and expenses, there’s a rule of thumb that you can use:

Of course, certain expenses will take priority at different stages of life and so it’s important to review your budget at least once a year, as well as when your personal or financial situation changes.  

4 steps for financial harmony

Kenosi Magosha, Head of Client Solutions Recurring Savings at Sanlam Personal Finances, says a harmonious financial life as a couple begins with these four steps:

1. Draw up a long-term financial plan. This will serve as a roadmap to help with big and small decisions along the way. Work with a financial planner to set up long-, medium- and short-term goals.
2. Put a contract in place. If you are getting married, a legal professional can give you guidance on which ante-nuptial contract is best for you. If you are living together, a financial planner can also help you draw up a financial plan and joint budget.
3. Don’t keep secrets. Transparency is key and helps you to work together to tackle debt.
4. Bank accounts – to unite or not? Some level of independence is always good in a relationship, but consider the benefits of accounts that are ‘joint’, separate and household.