Dating and Money Matters
Are you currently in a relationship and looking forward to settling down with your Mr. Right or Mrs. Right? Are you currently living together, co-habiting or just spending the holidays/vacation together? If yes, then you need to take a look at this article.
Various surveys conducted across different countries shows that the number of unmarried couples who live together has more than doubled between 2000 and 2015 with the increase being as high as 88% in some countries. The survey also shows that as much as 12% of couples living together are not married, with the majority of couples who are getting married choosing to live together first; more like testing the waters.
While this may be viewed as part of the courtship process, others view it differently either from a religious or cultural perspective. Couples living together should always bear in mind that a successful courtship does not always lead to marriage, just like a successful due diligence does not always lead to an acquisition. The reason being that you may be preserving your wealth and managing your risk just by not going ahead with the proposed marriage or acquisition.
Bearing this fact in mind and also considering that most of the couples co-habiting spend as much as two years or more without getting married, it becomes important to consider those things that can happen to each of the couples during the period of co-habitation and thereafter, whether they go ahead with the marriage or not.
While co-habiting, what happens to the finances of the unmarried couples? Can they save and invest together or operate a joint account or even acquire assets jointly without being married? Should they contribute towards their wedding? What happens if one of the partner is heavily in debt before the marriage, should the debt be transferred to the couple’s joint account? Should the couple include honeymoon as part of their wedding plans even when they are still struggling to finance the wedding? Should they borrow to fund the wedding ceremony?
Unmarried couples living together need to consider the following matters while co-habiting:
- Joint bank account and joint ownership of assets
While we do not have anything against operating a joint bank account or joint ownership of assets, we strongly recommend that where unmarried couples decide to live together, that they should avoid operating a joint bank account or joint asset ownership at the early stage of the relationship. Keeping their assets separate reduces the challenges of property dispute later, especially where they decide not to get married.
In a situation where a joint bank account is necessary, it might be better to operate separate accounts for earned income from business or salary and a joint bank account which both parties will contribute (equally or proportionately, depending on each person’s income and/ or personal agreement) to pay for common expenses.
In the case of properties, it is highly recommended that you do not contribute money for the acquisition of a property that will be held in the other party’s name as the asset will not be yours legally. If an asset belongs to both of you, it should make sense to be in both of your names.
Financial independence:
While co-habiting, one of the partners may not have a source of income or may make adjustments that significantly affect the financial position of the other party. In some cases, while unmarried, one of the partners (usually the female) may be encouraged to quit her job for one reason or the other.
If you are in a situation where your partner is encouraging you to quit your job, it will be good to make sure that you both have thought through the financial implications of the decision and have a legally enforceable written agreement in case of the unexpected, such as compensation in case the marriage does not work.
Always bear in mind that the party that does not earn any income or contribute to the running of the “home” is usually vulnerable and prone to suffer more in the event that the relationship breaks down. Often the pressure goes beyond immediate loss of financial support and may extend to psychological trauma arising from thoughts of how to survive now and in the foreseeable future.
Unless, there is a compelling reason (such as ill-health), it is not advisable that one party be restricted from working or denied the opportunity to earn an income.
Financial incompatibility
Do you know that disagreement about finances is the number one cause of divorce? Before getting married, it will be good to check if you are financial incompatible with your partner.
Financial incompatibility is not just about how much a couple earns, it is about money habits and priorities. Incidentally, most of these habits are noticed quite early, often before the marriage but because we always assume that we are marrying for love, and not for money, we often ignore the incompatibility signs.
Discussing issues surrounding financial incompatibility before marriage ensures that all the possible issues are brought to the fore for discussion and can greatly increase your chances of staying out of divorce court in the event that you finally get married. Finding a compatible spouse is paramount to achieving financial independence and freedom, whether married or not.
Wedding ceremony
Survey has shown that with benefit of hindsight, most couples will not spend as much as they did during their wedding, so why not learn from such experiences?
Till date, no one has been able to state the required amount (minimum or maximum) that should be budgeted for a wedding. Spending by couples on wedding is usually dependent on many factors such as their earning capacity, family background, level of external/family support, couples lifestyle and impression that they want to give among others.
Do you know that some couple spend as much as N10 million to N15 million just for their wedding ceremony? Just imagine what N10 million or N15 million would do for you as a newly married couple.
Organising large scale weddings with a tight budget may be difficult, so why not make do with the little extras which may not be noticed. This may include avoiding special/ branded serviettes or using a friend’s car instead of hiring a limousine. For items that will be used just for the occasion, why not consider renting one or buying a fairly used one.
Knowing fully that weddings are special days in most couple’s life, we would recommend that you plan for a beautiful and memorable wedding at a reasonable cost without relying on external funding or a wedding loan. Weddings do not have to cost a fortune to be beautiful as long you plan wisely.
Financial Communication
At the point that you decide to share your life with someone by living together, you should also bear in mind that money will be a big part of the sharing. Do not be afraid to discuss money related issues especially where you feel that the other party has some financial baggage such as huge loan portfolio, bad spending habit etc.
Discussing money related issues is often a sensitive issue for many people and may appear unromantic. However, no matter how sensitive it may appear, it must be discussed (romance or no romance), otherwise you will be bound for trouble while the relationship lasts. In a situation where you are not able to discuss this peacefully, calmly and rationally, you may need to seek for professional help as it may be sign of bigger challenges.
If your future financial wealth is important to you, you need to screen beyond the romance to make sure their financial habits and goals align with yours. If not, when the money issues come up, romance will jump out through the window. The discussion should go beyond income or current earnings because earnings (including salaries) can dry up for example in the case of a job loss or business folding up. Instead of just looking at the income, look at potential mates’ spending attitudes, financial goals and their potentials to create wealth in any given situation. It is likely that in the event that you finally get married, that your spouse will be your financial partner for the rest of your life. So, if you want a healthy net worth, and by extension, a healthy marriage, make sure you and partner are aligned on money matters.
Lastly, it is good to stress that a successful marriage can only be created by two willing parties who are willing and prepared to make the marriage work. The essence of dating and courtship is primarily to understand the other party and determine how compatible or incompatible both parties may be. No matter the emotions involved, financial matters should not be ignored as it more often than not acts as lubricant in most relationships. Money and money related matters is often behind many failed and troubled marriage, so watch out for the signs.
