Smart money decisions couples should consider

“Love is not enough” is a popular saying when the hardcore realities of life hit a couple, especially in the area of financial responsibility. Figures by the National Bureau of Statistics show that in 2018, separation rates in Nigeria increased by 14 per cent. It sated that 3,000 divorce cases were recorded in Badagry, Lagos; 80 per cent of those marriages crashed due to the inability of the man to cater to the home.

Amid the daunting reality of slowed economic growth, inflation, unemployment, and insecurity, financial literacy has become a survival compass for couples to thrive. Taking a cue from reports by the World Bank Group, the estimated per capita income growth of 0.7 per cent for Nigeria and the rest of Sub-Saharan Africa in 2022 is insufficient to meet the challenging goals of poverty reduction and shared prosperity in the medium to long term.

The ‘Africa’s Pulse: An analysis of issues shaping Africa’s economic future’, explains that residues of financial strains from the pandemic have induced a lasting impact on long-term growth, affecting particularly the poorest people and increasing extreme poverty.

It added that the weak rebound of the Nigerian economy in the aftermath is a result of a crumbling financial system.

Personal finance experts say that making good financial decisions is crucial for the success of any relationship, especially for couples. Looking at a few things to consider, the first step in managing finances as a couple is to create a joint budget.

This will give you both a clear understanding of income, expenses, and savings goals. It’s important, to be honest, and transparent about your financial situation and to communicate openly about your spending habits and financial goals.

Speaking with the PUNCH, the Director of Finance at the Innovation Support Network Hub, Fayo Williams, states that there is a need for couples to have a mutual understanding and attitude to money.

He says, “Each one of them is coming from different background; in one person’s background, money was probably plentiful and was spent on one’s needs. In another person’s background, it may have been that money was a bit scarce and was spent carefully. So, already there is a difference. You know there could be a difference in the attitude of the wife or the husband to spend the money so they need to come together and agree on what attitude they want to carry into their marriage. So, if it’s going to be an attitude of budgeting, of allocating resources, of having joint savings towards target assets, such as owning a piece of land or already a home, those decisions have to be taken and the issue of difference in money or behaviour towards money needs to be resolved.”

Williams, who is also the CEO of Simply Exponential Consult, adds that to avoid poverty, couples should decide that they would not look at.

He says, “For example, this is what my neighbour did. This is the kind of car my colleague bought; it will not end up well. So the couple needs to agree that they will not be influenced by what’s happening on social media. What is happening in their neighbours’ houses, they would make decisions wisely when it comes to money. So with those two, I think the couple will be able to avoid poverty.

The former Financial Manager at Wales Banks, Racheal Alabi, says creating a financial plan is a crucial step to avoiding poverty in a relationship.

Racheal says, “It all about planning; if you don’t prepare to plan you plan to fail. Let me use myself as an example. Me and my partner have been going out for a while, and we have people asking when are you two getting married. What are you waiting for? What’s happening? I am not moved and he is not bothered either. Do you know why? Because we have a plan.

According to the financial planner of ‘My finance and I’, yielding to pressure from society is what has landed many individuals in penury and financial depression.

It states, “There was a trending conversation on Twitter at a time of a couple who got married with the intention of waiting for two years to achieve some financial milestones before having kids.

“Do you believe the wife succumbed to the pressure of outsiders from her mom, in-laws, and four months into marriage she got pregnant?

“In a bid to cater to the unexpected responsibility, the couple ran into debt. So the husband had a plan but his partner was not as enlightened as he was about it or did not have a staying power. In most cases when it comes to marriage not everyone thinks alike. But ensure you are with someone that shares similar values on finances.”

Experts also believe that identifying shared financial goals can help couples work together towards a common purpose. Whether it’s saving for a down payment on a house, paying off debt, or saving for retirement, having shared financial goals will give a sense of purpose and motivation to make smart financial decisions.

Alabi explains, “The advice I give couples is to sit down with their partner and come up with a financial plan for their family. For example, you create a wedding budget and have an account where money is set aside. A financial plan is like a road map. You and your partner should sit down and plan your future in monetary terms.

“How much will it cost to organise our wedding? At this stage let’s say the budget is N10m; then you spread it over smaller goals. How much should be saved per month?  If you plan to settle in another country, ask yourself- how much is a flight ticket? So building a financial goal is the only way to stay afloat as a couple.”

Being financially responsible and considerate is a smart money decision that couples have to make when planning for the future.

Alabi notes that financial honesty and openness will go a long way in determining a couple’s financial success.

According to Alabi, “If I am someone who likes to be frugal and I am with a partner who likes to spend unnecessarily-irrespective of how much we love ourselves, money is the biggest issue in most relationships.

“So whoever you are in a relationship with has to have a similar perspective on the money with you. If they don’t then ensure they have the willingness to learn.  Another thing to discuss is if you should have a personal or joint account.

“If it is a joint account, decide what goes into family expenses, school fees, and rent. Nobody can withdraw from the account without the other person’s permission. So that way, you both have a discussion before either of you makes any financial decision with your joint contribution (joint account funds).”

More so, deciding who will handle particular financial responsibilities, such as paying bills, managing investments, and saving for the future matters. Make sure each person feels comfortable with the responsibilities they have been assigned and they have the necessary knowledge and skills to handle them effectively.

In an earlier report by Founder Money Matters with Nimi, Nimi Akinkugbe, couples should ensure money conversations are dealt with as soon as possible.

Akinkugbe says, “You would do well to consider having the money conversation fairly early and certainly once your relationship appears to be leading to a joint future. Discussing money might not be romantic but try to broach the subject before committing. Money can be a very emotive topic; that’s why people tend to prefer to avoid it. Ignoring it leads to both parties making assumptions about roles and responsibilities. Addressing money issues when there is no immediate pressure to make decisions should make things easier; the earlier the better.”

Communication is key when it comes to managing finances as a couple. Make out time to regularly have open and honest conversations about your finances and make sure you are both on the same page.

Making smart financial decisions as a couple takes effort and commitment, but the reward of financial stability and security is well worth it.

Article first published on the Punch Website

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