In adulthood, money plays a significant role and is closely linked to important life events, like romantic relationships. What happens when these two aspects are intertwined? A recent survey by Forbes Advisor revealed more than half of respondents (57%) think a loss of income or salary reduction would negatively impact their relationship.

Couples must make numerous financial decisions, whether they intend to marry, considering having children, or simply seeking financial stability. In this case study, we look at several scenarios and offer actionable recommendations for managing funds well in committed partnerships.

Planning Marriage and Understanding Debt

In South Africa, there are various options available for couples to choose from in terms of how they manage their financial affairs during marriage. These options include antenuptial agreements, community of property, Shari’ah law, and polygamous African marriages. Each of these options comes with its own set of rules and regulations that impact matters such as debt, inheritance, insurance, investments, and divorce. 

Case Study: Sarah and John have been in a serious relationship for several years and are considering marriage. However, they have concerns about merging their finances, particularly regarding their existing debts. 

Advice: Before tying the knot, Sarah and John should openly discuss their financial situations, including any debts they may have. Understanding each other’s financial standing is crucial for making informed decisions. They can devise a plan to tackle debt collectively, prioritising high-interest debts while maintaining regular payments on others. Additionally, they should consider creating a prenuptial agreement to outline financial responsibilities and protect assets.

Maximising Financial Benefits in Relationships

Honesty about money is vital for building trust within a marriage. Couples have various options for managing their finances, including separate accounts, a joint account, or a combination of both. While separate accounts can help prevent arguments, they require more planning and may not optimize family finances. On the other hand, a joint account simplifies budgeting but can lead to conflicts if partners’ spending habits differ. Combining a joint account with individual checking accounts allows for better expense tracking and reduces money-related disputes, fostering financial harmony within the relationship.

Emily and David have been living together for three years and are exploring ways to maximise their financial benefits as a couple.

*Advice*: Emily and David can leverage their relationship for financial advantages by pooling resources and expenses. They can explore joint bank accounts for shared expenses while maintaining individual accounts for personal spending. Additionally, they may benefit from combining insurance policies, such as health and auto insurance, to lower premiums. Regularly reviewing their finances together can also help identify areas for further optimisation.

Planning for Holidays and Savings

During your vacation, expenses like transportation, meals, insurance, and activities can add up to a significant portion of your income especially if you’re a couple. It is important to try to save money wherever possible. After deciding on a travel destination, it is beneficial to explore ways to maximise your holiday budget. This could involve finding the most cost-effective time to travel to your desired location or consulting with a travel agent to secure discounted insurance packages.  

Mark and Lisa are planning a dream vacation but are unsure about the financial implications and how it fits into their long-term savings goals.

*Advice*: Mark and Lisa should create a budget for their holiday and incorporate it into their overall financial plan. They can set aside a specific amount each month towards their vacation fund, ensuring they don’t derail their savings goals. Exploring cost-saving measures such as travel rewards programs or off-peak season travel can help them enjoy their vacation without breaking the bank. Additionally, they should consider establishing an emergency fund to cover unexpected expenses that may arise during their trip.

Planning for Children and Financial Preparedness

Every parent desires the optimal outcome for their children, and although this may not be achievable at all times, being proactive in preparing financially before conception and childbirth can set the stage for the arrival of your little one and establish a solid foundation for financial readiness.  

Michael and Jessica are contemplating starting a family but are concerned about the financial responsibilities associated with parenthood.

*Advice*: Michael and Jessica should conduct a thorough assessment of their current financial situation and identify areas where they can adjust their budget to accommodate the additional expenses that come with raising children. This may include reevaluating extra spending, exploring childcare options, and setting up a college savings account for their future child. They should also review their health insurance coverage to ensure it adequately meets their family’s needs.

Living Arrangements and Housing Expenses

The continuously increasing cost of living is mainly driven by inflation and the escalating prices of fuel. It may be financially advantageous for couples in committed relationships to consider cohabitation as a way to save on expenses. Consolidating living arrangements can result in shared costs for rent or mortgage payments, as well as expenses for internet, media subscriptions, online entertainment, security services, and other monthly household bills.

Alex and Rachel are discussing moving in together but are unsure about how to approach shared living expenses.

Advice: Alex and Rachel should have an open and honest conversation about their financial circumstances and expectations regarding living arrangements. They can devise a plan for splitting housing expenses, taking into account each person’s income and financial obligations. They may consider drafting a cohabitation agreement to outline responsibilities related to rent, utilities, and household chores. Additionally, they should regularly revisit their arrangement to address any changes in income or expenses.

Managing finances in serious relationships requires communication, collaboration, and careful planning. By openly discussing financial goals, responsibilities, and concerns, couples can navigate various life stages with confidence and ensure a secure financial future together. Implementing the advice outlined in this case study can help couples achieve financial harmony and strengthen their relationship in the process.