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G & J

Committing to Financial Togetherness

You have been two individuals, and then became a couple, finally making the commitment to marriage. If you think that now you are married you are financially committed together, you most likely are wrong. The chances are that during your time together before you married, you started intermingling your monies. You may well have triggered the Property Relationship Act.

Now that you are married or in a Civil Union, you need to decide what to do with your combined monies. Some people may decide to contract out, by having pre-nuptial agreements in place. These are considered especially important when there are long standing family assets in place. In New Zealand, this has historically been a family farm, but equally it could be some other successful family business of some sort, or family homestead passed down through the generations.

It is not really the quantum of money that is important. Money can have a lot to do with emotions, family history and personal expectations. It is difficult to place a value on emotions.

What you need to do is find some common ground on which to start a combined financial relationship. Set some combined financial goals that you both want to achieve. Whilst this should be a simple process, there can be a major variation in financial attitudes of individuals who become couples. It is really no different to one person being a “tidy”, and the other an “untidy”. Somewhere along the lines there needs to be an agreement, which hopefully can be reached amicably. Because of this, it may be best if this is sorted out before the major financial commitment of going through an expensive wedding.

If there is no common ground between both parties financially, there may always be uneasy financial thoughts between the two parties, which invariably will rear its ugly head somewhere down the track.

One of the easiest ways of financially getting to know your partner is to work out a joint budget, with the goal of getting to an agreed financial target. The target could be for example a ten-night winter holiday in Phuket, in eighteen months’ time. So, the budgeted trip expenditure of $6,500 will need to be accumulated. That means a savings commitment of $350 per month.

That may not sound much, but there never seems to be any accumulated funds in the bank account. That then becomes a very good starting point, as you really need to know where your monies are going. Monitor your credit card purchases. Be extremely wary of where cash is going. It may be disappearing in after work drinks, so there is nothing to show for it. Or it could be daily cups of coffee at a café with friends or fellow staff members. Nice to have, but financially it can really add up.

Disclaimer

Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.