It has to do with the fact that your legal and tax statuses have changed. Your future financial decisions may be influenced by your spouse’s assets and liabilities.
Getting married has a significant impact on your financial situation. It's not only that you're living together or splitting expenditures; marriage isn't required for that. It has to do with the fact that your legal and tax statuses have changed. While your credit score remains personal, your future financial decisions may be influenced by what your spouse brings to the table.
Many marriages are strained because of squabbles over finances. You may be surprised to learn that the difficulties can begin even before that first dance.
Here are some things we recommend you discuss before you say, “I do”.
It's critical that you and your partner both divulge your whole financial situation prior to exchanging vows. Because marriage is a legal and financial decision, you should be aware of the risks you're taking by committing yourself to another person. Make a list of all your assets and liabilities. Sit down and address any issues you have about each other's balance sheets.
You can make an informed decision on how you'll manage your funds as a married couple after you've assessed the situation. A prenuptial agreement may be necessary if one spouse has significantly more assets or earning ability than the other. Protecting premarital assets and taking care of children from prior marriages are also possible outcomes of these arrangements.
Make a strategy for paying off your debt if you or your partner have a lot of it. The debt incurred before marriage does not instantly become the joint responsibility of the newlywed couple upon signing the marriage contract, but it may nevertheless have an impact on your combined finances after the wedding.
Make a solid financial plan together
- How much time will one spouse spend at home caring for the children?
- What are the most important things in your life, and how do they relate to your finances?
- What are your long-term professional plans and ambitions?
- How old do you want to be when you retire, and what type of retirement do you anticipate for yourself?
- How much financial responsibility will either of you bear for the children you had from a prior relationship?
- Are you likely to be called upon to help out with the care of aged family members?
- In order to achieve your objectives, would you or your partner need financial assistance or time away from the workplace to complete your studies or time off work?
- Do you approach saving and spending in a more or less equal way?
How are you going to deal with these disparities?
Some people are natural savers who may be perceived as risk-averse, while others are huge spenders who prefer to make a statement, and still others enjoy shopping and buying. Some acquire debt haphazardly, while others are natural investors who save for future self-sufficiency. Many of us may exhibit more than one of these traits at the same time, but we tend to stick to one major type. It's best to notice harmful habits, confront them, and control them.
Keeping secrets from your spouse can lead to marital disaster quickly. Any secret can be harmful, but financial secrets may be even more so.
Because community of property is the default contract in South Africa, if you marry without drafting up an ante-nuptial contract, you will automatically be considered married in community of property. You and your spouse share the risks and rewards of a joint estate when you marry in community. No asset can be physically separated, and you and your spouse will share gains and losses equally regardless of your financial contribution. A joint estate is only divided at the dissolution of the marriage. In other words, every debt incurred before and during the marriage is included in the joint estate.
If one of you is declared bankrupt or creditors pursue your spouse for a debt, you will both be held responsible for the remaining obligations. Furthermore, if your spouse is unable to pay the obligation, you may be held liable for the entire amount, not just half of it.
Where finances are concerned, it’s always best to be honest with each other, communicate and work together towards a common goal, no matter the type of marriage contract you have.