Matters of marriage and money

Studies reveal that financial problems are the single biggest cause of contention in marriage. Talking about money can be a little awkward in the early stages of a relationship but it is important to discuss financial matters; shying away from the issue will only lead to misunderstandings later on. Discuss what you consider to be an acceptable level of financial risk. One of you may be prepared to bet everything, including your home for the prospect of supernormal profit whilst the other might not be able to sleep at night when the market is plummeting. Consider these two scenarios.

27 year-old Kemi is a lawyer. She works in a Lagos based law firm.  She is engaged to 32-year old Emeka who recently returned to Nigeria after having worked in the United States for 4 years. He is “into oil and gas.” They had a whirlwind engagement and a lavish wedding; the wedding planner considered even the minutest detail. However, there was one crucial piece of planning that they completely overlooked; that was planning for their financial future together.

Emeka had booked a wonderful honeymoon at a five-star resort in Dubai. The first sign of trouble was when his card was declined in a bookstore at the airport; for the rest of the holiday Kemi had to pay for everything with her card. Sadly, Emeka hadn’t disclosed that he owed $35,000 on his credit card, had not paid overdue rent on his Lagos apartment and had just received quit notice from his landlord, car payments on his jeep had lapsed and he faced repossession, and his company had a non performing loan with a local bank. The honeymoon was over.

Dele and Tope Thomas have been married for 11 years. Tope has a passion for designer labels and has always spent all that she earns whilst Dele is a conscientious saver who craves financial security; this caused much strain in the early years of their marriage. They recently established a family budget, which has helped them to manage their expenses. They prefer to maintain a degree of financial independence so they separate accounts for their incomes and a joint account for household expenses to which they both contribute in proportion to their incomes.

In the new arrangement Dele pays the mortgage and school fees whilst Tope takes care of utility bills, staff salaries and food. Significant spending decisions are made jointly; they have agreed on spending limits for large expenses. In addition, each has agreed to save a certain amount each month, in a balanced fund which increases as their salaries increase. Beyond this each is free to spend the remainder of their money and they do not have to account for it.

Dele and Tope revisit their financial goals quarterly; this helps them to stay abreast of things both individually as well as in the context of their joint finances. Because they have broadly stuck to these terms, they have fewer arguments about money.

Create a budget. Determining where you stand at the start of your life together is a good way to begin the process of building a viable financial future together. Create a comprehensive list of your financial assets and liabilities and keep good records of all your investments and debts. Both parties should have copies of the documentation in case of an emergency.

Be honest and open about both the positive and negative aspects of your financial history. How much debt do you have individually? Many people don’t discover the extent of their spouse’s financial obligations until they are married, yet debt brought into marriage can be a major source of strife. Full disclosure is important so that there are no surprises down the road.

Set goals together. A well thought out plan is a key ingredient for a successful financial future. Don’t assume that your fiancé(e) knows what you envision for the future. Discuss your expectations, share your ambitions and set short, medium and long term goals that are specific, measurable, achievable, realistic, and time bound.

Where do you see yourselves in 10, 20, 30 years? Will you both work, or will one of you focus more on the family? Is buying a house an immediate priority? When would you like to retire? If your spouse doesn’t share your financial philosophy, don’t give up hope. There will be differences, but do acknowledge and appreciate your partner’s aspirations and dreams and try to find a workable compromise. Remember that your individual goals are just as important as your joint ones.  Considering money matters together provides a great opportunity not only for strengthening a relationship but also for fulfilling mutual goals with a sense of direction and purpose.

Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

Nimi Akinkungbe

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