We dedicate a great amount of resource to protecting and growing our careers and business – but how much time do we place on protecting ourselves within our relationships?
A common evolution: You meet. You fall in love. You decide to live together and/or get married. Does everything become ‘what’s mine is yours and what is yours is mine’ at one point? And is that the right way to go?
Every day I see couples 100% devoted to each other, with their eternal love proclaimed loud and clear in all areas of their lives, but most of all – in the finances department. Money appears to be a joint possession with funds often going into the one account and then disbursed to cover the mortgage, the shopping bill and so on and so forth.
And then disasters strike, whether they are caused by your own behaviour or being subject to someone else’s. Protect yourself and your partner from the ‘what if’s’ and the ‘it will never happen to me/us’.
Consider the following:
Plan for a rainy day
Consider having assets and income streams in individual and joint names to allow self protection and independence should it ever be required. Life often throws curve balls our way – so why not plan to have a particular income stream or sum of money towards the unexpected?
Most couples don’t factor in children’s education and lifestyle costs until the day the school fees come in or the never ending extra curricular activities bills. Plan ahead and have a plan in mind on how to combat the ever growing fees.
What happens if the bread winner suddenly looses their job, suffers a physical ailment or passes away? Consider taking out appropriate insurance such as life insurance and income protection to combat such possibilities head on.
They sound great in theory but how many couples actually draft one up? And even if they do – do they analyse the results consistently and bring about the changes required? Budgets are extremely useful for seeing where your money actually goes and/or where it can be tweaked to improve family cash flow.
Yes, they are useful and often crucial to get you from point A to B. BUT, ensure you aware of the interest charges involved. Another tip is to change your credit limit from the default you are given upon registration to one that is more practical and recoverable within a relatively short period of time. If you or your partner isn’t disciplined in this area – consider getting a prepaid credit card whereby you and/or your partner can only use the funds available on the card as opposed to relying on someone else’s (expensive) credit facility.
Structuring your Income & Assets
Within the average household, one spouse tends to earn higher than the other. This is often attributed to part time employment and/or the inevitable glass ceiling. If a material income difference exists within your household – aim to take advantage of tax brackets. Why should one spouse suffer paying the top marginal rate of tax at 45% and the other at 15 or 30%? Aim to structure (and restructure where possible) your tax structures and investments so as to allow efficient income splitting amongst spouses, and not to mention improved cash flows from the tax you’ve saved!
Review, review, review. What might have been right at one stage of your relationship, may not be right for you and/or your family NOW. Like any career or business decisions you make – consider doing the same rigorous review of your own family’s circumstances on a regular basis.
Consider the above during your relationship and you just might get to live happily ever after!
Can you add to the above list or have a scenario to share? Please comment below.