Marriage is a union of love, not business. (Well, we hope…)
But if you don’t treat your marriage as something of a vocation – with as much impact on your financial security as on your happiness – then you’re compromising the future you’ll share. And even if you manage your finances with the same enthusiasm that you lavish on your fantasy league lineup, you may still be making major missteps. Read on for ways that traditional marriage money arrangements might not lead to “happily ever after”.
MARITAL MONEY MYTH 1: We should co-sign loans
It’s a good idea to buy that car together, right? Not really. You might end up paying for it, literally and figuratively. Graeme Wilson, MD of Legal and Commercial Solutions, explains: “Often loan agreements have a provision that allows the loan provider (or creditor) the option to claim payment from any person that is party to and signs the loan agreement.” So even if you and your partner don’t intend to both be liable, the person who co-signs a loan agreement could end up being liable to the creditor for the full debt. Plus there’s the added negative affect to both of your credit scores, which could compromise your ability to secure more credit if one of you loses a job or otherwise ends up in financial trouble.
HOW TO MAKE IT WORK
If you can qualify for a credit on your own, take that route instead, says Anthony Sprauve, a spokesman for myfico.com. You don’t want to add to your credit score unnecessarily (although creditors might take your martial status into consideration anyway). Consider alternating who signs smaller loans, such as those for cars or home improvements. Don’t worry about things like legal ownership; if you’re married in community of property, or out of community of property with accrual (check out the side bar), ownership of the asset should fall into the joint estate if things ever head towards Splitsville. Just make sure that the type of loan agreement you’re entering into gives you some kind ownership, advises Wilson.
MARITAL MONEY MYTH 2: We shouldn’t pay for household help if we can do it ourselves
Even when a husband and a wife both work full-time, she still spends more time on household chores than he does. As a result, her stress levels may increase, according to a 2011 study in the Journal of Family Psychology. And no, she’s not having fun doing the laundry: a marriage in which the wife works full-time and the husband doesn’t help much with chores is 44% more likely to fail than a marriage in which the man helps out more, a 2010 London School of Economics study found. Plus, considering the fact that it’s your place, too, you should probably be stepping up and doing those chores, too. And securing outside household help can make you more productive at work, potentially raising your household income. For example, a 2010 Stanford University study found that women in academic science positions who had outside household help published more papers.
HOW TO MAKE IT WORK
Employ a domestic worker, or up the number the days you have household help if you find yourself cleaning the floors on Friday nights. Try marvellousmaids.co.za – they place people all over the country. Most importantly, they offer a three-month warranty and you only pay their commission fee if you find someone you’re comfortable with. (They also assist with contracts and UIF registrations, which is half the ball ache of hiring a maid.)
MARITAL MONEY MYTH 3: Marriage has tax advantages
Tax planning is hardly a reason to get married, but being married does have its tax advantages. “In terms of the Income Tax Act spouses qualify for certain exemptions and allowances,” says Wilson. “For example, contributions for a spouse paid to a medical scheme may be taken into account when calculating medical allowance.”
HOW TO MAKE IT WORK
Tax season is stressful, but don’t e-file in a panic the night before the deadline. Rather make some time sit down with your partner (and a financial expert, if numbers give you a headache) to check whether you qualify for any exemptions or allowances.
MARITAL MONEY MYTH 4: We should own our home together
When it comes to home buying, it might seem logical to buy the house in both of your names, since you’ll both be living there and contributing to the household. But it’s not really that simple. “Buying things together is a bit like scrambling an egg: it’s going to be difficult to unscramble,” says Wilson. Although there are income tax exemptions on transfer duties on death (or divorce) from one spouse to another, there might also be difficulties if the relationship fails. Deciding who will “get the house” often ends up with the property being sold so that one partner can get paid out. Not great if you want to pass on the family home to your kids.
HOW TO MAKE IT WORK
If you want to pass a home on to someone other than your spouse, but you want her to have the right to live in it if something happens to you, Wilson suggests creating what’s called a usufruct in your will. This will give your significant other the ability to stay in the family home, without giving them ownership. All it takes is some careful estate planning, says Wilson. Death is inevitable, so make sure you’ve thought about who gets what – then put it down on paper.
MARITAL MONEY MYTH 5: If her job doesn’t pay well, she should quit to raise the kids
If your wife’s take-home cash barely covers childcare and commuting costs, you’d think she’d be better off staying home with the kids. That may be true in the short term, but over the long term this plan could spell disaster. If you are retrenched, fall terminally ill, or just get hit by the proverbial bus, your family could be months from financial ruin. Unless you two have a large nest egg (and if you’re a typical couple, you don’t), your wife would have to start job hunting from scratch in the midst of a family emergency. There are also mental health benefits to working outside the home even if it can mean some short-term financial strain. A 2011 Journal of Family Psychology study found that women who worked part-or full-time in the years before their children started school reported fewer symptoms of depression and better overall health than moms who stayed home.
HOW TO MAKE IT WORK
If you both plan to work, you’ll need quality childcare and equally shared parenting, says Dr Kerstin Aumann, a senior research associate at the Families and Work Institute. “The good news is that men are becoming more involved in parenting,” she says. In fact, a recent Institute report shows that men with children in dual-earner homes are now reporting more work/life conflict than women are. That doesn’t mean you have to spend a fortune on playschool or crèche. Try find some creative childcare solutions. Ask your parents if they could commit to spend one day a week with their grandkids, or find other parents who work and share fetching and lifting.
