Your money: how much should your spouse know

Discussing money and finances with a spouse or significant other is like all else in a relationship - a successful outcome is dependent on the honesty and transparency of the discussion. Unfortunately, money is a sensitive topic, often avoided in relationships, but it undeniably important to maintain financial awareness as a couple and as individuals.

Financial Awareness

Christine Marincowitz, a spokesperson for the Ecsponent group commented: “While our focus is on financial health and not marital health, it is important to understand that these two things go hand-in-hand. For couples to achieve a healthy level of financial awareness, honesty is the first step in the right direction.”

A survey conducted by American giant, Fidelity Investments, supports this advice. It uncovered for example that 54% of couples disagreed on how much they should save for retirement and 43% disagree on their planned retirement age.

Most spouses believe that they have a healthy relationship with money, but Fidelity’s study revealed the opposite. A startling 34% of respondents were unable to say how much their partner earned. Unfortunately, there aren’t any known South African studies that support these statistics, but if this is anything to go by, it is indeed an alarming starting point.

Financial Infidelity

When spouses avoid financial truthfulness, the door opens for financial infidelity, which is the secretive act of hiding money, spending money, or opening bank accounts that the other person is unaware of. According to Brad Klontz Psy.D, (Klontz, 2013) financial infidelity is a serious pressure point in many relationships and can result in divorce in more severe cases.

Financial fidelity is not just about what happens after marriage, but also truthful disclosure of each partner’s financial status before tying the knot. Many married couples bring debt into the marriage. In fact, Fidelity’s study showed that this happens in more than half of unions and approximately 4 in 10 said that it had a negative impact.

While it is to be expected for couples to have some debt – study expenses, a car, clothing accounts etc. – the key to success is disclosure. If the couple understands their joint commitments and work on a financial plan, their success is more likely. Hiding the extent or detail of debt can derail the hopes and dreams of a new couple with very little notice.

Saving for Retirement

Marincowitz agrees with Dana Anspach’s (Anspach, 2018) that the “my money, your money” approach lately takes centre stage in many marriages. While financial independence is critical for both parties, couples are more often than not, better off when saving as a unit. For example, by combining your efforts, you could have access to greater investment returns and a greater variety of options. Marincowitz went on to mention, “As a married couple, your fortunes are tied together, which means that all financial decisions should be made as a unit in order to build a retirement nest egg that is able to sustain both spouses.”

While some couples fail to save together, some spouses simply never have the discussion. This often happens because couples are afraid to discuss the unknown and end up shying away from facing the realities of retirement in the future. That is also where risk is introduced for one party, usually for women, who leave the financial decisions in the hands of their husbands and are disillusioned at their death, during divorce or in retirement.

“Planning for and combining your fortunes is a wise move but both partners need complete see through and equal decision making pawers. It is useful to engage a financial advisor in the process to ensure that both parties’ interests are represented and protected.”

Ecsponent Financial Services, a subsidiary of JSE-listed Ecsponent Limited, offers advice to clients around their financial well-being and retirement plans. Couples who wish to embark on a journey as a saving unit would do well to visit professionals such as Ecsponent Financial Services in order to fully appreciate the fine details and nuances involved in saving together.

At the end of the day, it’s important for partners to understand that with the right financial advisor on your side, teamwork will always trump individual work. “The secret is not to overrule one another, but to rather take the time to understand the needs of one another and progress from there,” concludes Marincowitz.