The Best Pocket Guide Ever for Family Finances
10 October 2016
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On mobile, on digital, on demand, this is Old Mutual Live, Money Coach. Hello and welcome, my name is Chris Gibbons. There’s no doubt that all of us need to manage our finances properly. There’s few who would disagree that most of us could do it better, but where to start? The vast majority of us live in broadly similar circumstances. Do many of the same things in a unit called a ‘family.’
My attention was caught by a new book from Financial Expert, Jillian Howard called The Best Pocket Guide Ever for Family Finances. Jillian Howard, welcome to Old Mutual Live Money Coach, thank you for joining us. The approach you’ve taken in the book is that there really are a number of very significant milestones. Which just about all of us have to pass at one time or another.
Jillian Howard: That’s correct, yes.
CG: Okay, we’re going to focus on the very first big one. Two young people meet, they fall in love, they decide to get married. Sounds simple, but actually that’s when things can get complicated, where should they start?
JH: There are two major issues that need attending before people get married. One is the actual marital contract and the second one is making sure that they enter into their marriage debt free. In other words they have a debt free wedding where possible. I think those are the two big ones before you get married.
CG: Walk me through the contract side of it, that sounds daunting.
Which is the best financial option to get married in?
JH: It’s very contentious. There’s basically three types of marital contracts, one is getting married in community of property, or out of community of property. The other is a combination of those two, which is married out, you get married out of community of property with the accrual system. That means that from the date of marriage, everything you accumulate together is shared equally.
CG: How do you decide which of the three is going to be the best one for you?
JH: You’ve got to sit down as a couple and communicate quite strongly on what you believe about marriage and how it should evolve. Quite often people who are about to get married are obviously in love, in fact all the time they’re in love and then the getting married in community of property. Sounds very romantic, what’s yours is mine and what’s mine is yours and so on.
But if it’s a second marriage there might be other complications. A person may have accrued a lot of assets, a lot of value of investments that they don’t necessarily want to share if the marriage goes south. In cases like that they might think of marriage out of community of property, with or without the accrual system.
CG: Really you’re saying you need to be a bit hard headed and see through the romance.
JH: You do, you need to actually think of it from a financial perspective instead of a romantic perspective.
CG: All right then, how do you begin to lay the foundations Jillian, of a financially stable marriage? You say go in debt free?
Begin your marriage as debt free as possible
JH: Yes, that’s a good start. The biggest thing is communication. People talk about all sorts of things; where they want to go on honeymoon, how many children they want to have. But they find it very difficult to talk about money. They really have to communicate on how each other spend their salaries. Invest their surplus or don’t invest their surplus or in fact spend more than their surplus and wind up in debt.
They need to be clear how each other spends their money. In order to do that they need to talk to each other. They especially need to talk to each other about how they feel about debt. One person might think it’s okay to have a credit card and be in a little bit of debt. The other one might think not at all, never and they need to know how each other feel that way.
CG: These days there seems to be a huge amount of pressure on young couples. Especially, dare I say it, the bride, to have as lavish a wedding as possible. How does a young couple get around that?
JH: It’s a tough one. What they should do, of course, if they’ve got this dream and ambition to have a lavish wedding is from their first salary start saving towards it. That’s going to be the best bet. Some people, luckily, have parents that can afford to pay for it. But a lot of people don’t.
So they’re going to have to be a bit more realistic. Yes, you can have the best dress, you just need to save up for it. In the bygone eras people used to do that, they used to save up for their weddings and have a dowry and a trousseau and those kind of things. They didn’t get into debt.
CG: I make the point because a lot of people start their marriage off by taking on a huge amount of debt just to pay for the wedding, that’s wrong.
JH: The wedding and the fancy honeymoon that they can talk about for years as well. It is wrong because it puts a lot of financial pressure on. You had two separate salaries and spending units, you brought them together with now more debt. So they’ve immediately got less money than they had before they were married.
How to have the wedding and afford it
CG: In your book you point out that there are all sorts of ways to keep the cost of the wedding down and still have a great time.
JH: Yes, there are. In fact, online there’s a couple of, not so much wedding planners, but wedding consultants. Who can give you an idea of how to cut costs and what the costs of each aspect is. They can also give you examples of what their clients have done.
So you can go in and say, this one went on holiday to the Kruger Park, for example, instead of Mauritius and they saved X amount of money. They can put all of these things together and come up with something within your budget.
CG: Once married Jillian, what about things like joint bank accounts, joint budgets, all of that stuff?
JH: You can decide on that before you get married or you can argue about it after you’re married! It is something, it’s communication, how are we going to do this? Is it going to be your money, my money and then a bank account in the middle, for the household expenses?
But then also after you get married there’s going to be more than likely children. Then those spending habits are going to change again. Who is going to be the one that spends on the children? It’s usually the woman and I have found through meeting and talking to lots of clients that the woman will spend her salary on expenses such as the school fees, the clothes, the food, those kind of things. Not on investments.
Then the husband will spend his money on investments and retirement planning and those kind of things. So that’s a co-imbalance should the marriage ever end. Those things need to be discussed by the parties so that they can come to a fair arrangement.
CG: The bottom line, to sum up, go into your wedding the way you intend to continue. Communicate, have a great time, but do so, do everything in a responsible and prudent way.
JH: That’s correct.
CG: There we’ll leave it. This has been another edition of Old Mutual Live Money Coach, my name is Chris Gibbons. With me has been Jillian Howard, author of The Best Pocket Guide Ever for Family Finances. Jillian, it’s a brilliant read, if anyone wants a copy, where would they find it?
JH: You can find it anywhere, CNA, Exclusive Books and online at takealot.com. It’s widely available.
CG: Do you have a website?
JH: I do have a website, it’s just jillianhoward.com, the book’s also on that website as well.
CG: Jillian Howard. Remember, please feel free to get in touch any time if you have any questions for me, topics you’d like covered on Old Mutual Live Money Coach. Just send them direct to me at firstname.lastname@example.org, I’d be delighted to hear from you. Until the next time, thank you for listening. Old Mutual Live, on mobile, on digital, on demand.