The fights couples have when it comes to money can get really ugly. So ugly that one of them takes the issues to court, which already implies any of the following: that the marriage is strained, that both of them have come to passionately dislike each other, or that they’re headed for a split. There are, of course, less extreme scenarios where one finds herself upset and unsure of how to confront her partner of his, say, gambling, or where the other is frustrated about having to shoulder everything but keeps it to himself.
So to avoid those cases in your future with your partner, both of you have to talk about the financial aspects of your lives. It sounds completely unromantic, but who said all acts of love are?
1. Financial wellness assessment
For you to know if tying the knot is currently feasible (or feasible in the near future), you need to identify your current financial status and attitude. How are your spending habits? What do you spend on? How are your savings? Do you have money for emergencies? Are you in debt? If you are in debt, what’s your debt-to-income ratio?
This kind of assessment gets you started on planning where you need your money to go. Creating an actual financial plan doesn’t have to be complicated. Essentially you’ll need to set a goal (What do you want to happen with your money? What will you spend it on?) and a method to track your expenses and savings.
2. Debt reduction plan
You’ll need to sort your debts out before tying the knot because that is added baggage. Imagine having your own share of debts and borrowing more money—by the hundred thousands—just to finance the wedding. Or agreeing that what’s yours is his only to find out he has to pay off so many of his loans with your hard-earned money.
Part of creating the financial plan stated in #1 will have to include a doable plan of paying off debts, and a target date when the debts are greatly reduced, if not eliminated. In fact, ridding yourselves of your debts should be your priority.
Now this isn’t to say you should hold off the wedding until you or your partner have paid every cent back. You can do that, sure. But what’s important is for you and your partner to know that each other’s money and spending habits are under control.
3. Joint or separate finances?
Some couples have combined their accounts to establish their business together. Others keep their accounts separate because they have their own sources of income. Still, there are those who have a separate account for their personal expenses and have a joint one for the household, their travels, and other shared goals.
You and your partner will have to sort out which is best considering your goals, plans, and lifestyle.
4. Division of property
With a prenup, you and your partner can divide your assets in a very specific way and settle how your finances will look like if you two split up. The agreement can be as simple as “What’s mine before we got married is still mine; what’s yours before we got married is still yours,” or a little more complicated, like “Our profit from our business will be divided 70-30, 30 for me but you’ll have to shoulder the tuition fee of our child until he graduates from college.”
Why is signing a prenup even worth considering? Well, for one, because divorce (which has provisions on who gets what) is not legal in the Philippines, you and your partner would have to sort through your assets on your own (with the help of your lawyers, of course) if you want to separate. If you were to divide your shared assets when your marriage has fallen apart and you practically hate each other already, agreeing with your spouse’s demands (and vice versa) becomes much more difficult. So you might as well come to terms when you love each other and when matters haven’t gotten complicated legally and emotionally.
Another reason for considering a prenup is that the Family Code stipulates that the husband and the wife will jointly own all property acquired at the time of the marriage and the times following. If you don’t want that to apply because you don’t want your partner running off with your inheritance or business, then you get a prenup.
Also, if your partner is a citizen of another country, he is bound to his country’s laws on divorce and ownership of property. A prenup will help you and your partner easily sort out how you want to divide your assets.
Prenups do sound ominous because they make you look like: 1) you’re assuming that your relationship and marriage will not last; 2) you think your partner could be marrying you for your money (and you want to make sure he isn’t); and 3) you think your partner is that asshole who will take your wealth when things don’t go well.
But a better way of looking at a prenup is that it’s is a way of telling your partner, “Hey, I’m not marrying you for your money. Your assets, your inheritance—they’re yours; I don’t want any part of it. I’m marrying you because I want us to be there for each other no matter what, and to raise a family together.” *Insert other cheesy lines here*
5. Financial roles
As with any partnership, there has to be a clear division of roles to keep the union and everything that depends on the union intact, and for the sake of accountability. Who pays for what? Who will file statements and track the accounts? Who is the financial planner? Who decides where to invest? Who does the budgeting?
If you and your partner are unsure of how to go about the roles, you can take off from research findings. Men have been found to be better (in a sense, stricter) at budgeting, while women make better calls in investing (since they aren’t overconfident risk-takers).
6. Financial goals
Marriage finally allows you and your partner to build your lives around each other (and your children). Those dreams of traveling together, setting up a business or two, living in your dream home, enrolling your kids to good schools—these can be attained by creating financial goals and outlining plans to achieve those goals. Yet because it’s likely that you and your partner also have your own professional ambitions, both of you will have to talk about which to give up for a certain period and make some changes in your financial goals to attain what you guys desire.
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