Joint financial planning can create the ideal opportunity to focus on turning short term hardships into long term successes.
Joint financial planning is not the norm, even beyond 2008/9. We find that relatively few married women are intimately involved with the financial planning of their families. Although women are often tasked with monthly budgets and the commercial running of the family – shopping, schools, bills – they are seldom involved with long-term joint financial planning.
The ideology of complete trust and interdependence of marriage partners or life-time partners is a good thing as it builds a society with strong morals. But the reality is that in SA, for whatever reason, many couples split up.
There exists overwhelming evidence that one of the fundamental reasons for failed relationships is ‘financial issues’. One would, therefore, think that involving both parties in their long-term joint financial planning would be high up on the agenda of couples seeking a long-term relationship. However, this basic need to plan financially is often overlooked.
The advantage of joint financial planning
Joint financial planning creates an ideal opportunity to focus on turning short-term hardships into long-term successes. It gives both parties additional areas of opportunity and, importantly, provides joint responsibility for the future growth of their partnership and family.
It is true that today’s women are financially sophisticated and realise the importance of standing financially on their own two feet, yet many are reluctant to be involved in joint financial planning. Relying on a spouse to provide for one’s financial needs or trying to live happily ever after on the proceeds of someone’s pension fund is not the fairy tale one wants to be a part of. You will need about 70% of your final income increasing every year by the rate of inflation to maintain your preretirement lifestyle. This means that you will need to be a member of a typical retirement fund for at least 30 years.
Most working couples are used to receiving two incomes. Without joint financial planning, retirement provision by only one spouse will result in a significant drop in overall household income upon retirement, which leads to the unwelcome reality of lifestyle adjustments to a lower standard of living.
Living longer makes joint financial planning a must
According to current trends, you will likely outlive your husband/partner by eight to 10 years, even if the two of your are exactly the same age. It is, therefore, even more incumbent on you to ensure that you are involved in every stage of joint financial planning, as you will require independence.
The aging process is not always kind. As you get older you are more likely to have major health-related expenses. We see healthcare spend as the third highest cost of a family’s budget, after accommodation and travel. If the trend continues, healthcare may even become the second highest cost. Medical aids need to keep pace with this and we have found that many older people have been forced to reduce the benefits on their medical aids as they have become unaffordable.
Yes, a high proportion of women in SA are single, and mothers
Whether this is due to divorce, being widowed or by choice, it makes it all the more important that women rely both on their own personal, as well as joint financial, planning with their subsequent partner/s.
Single mothers more often than not end up with the financial responsibility for looking after the children and getting money out of the ex-spouse or partner. This can often be a bitter, acrimonious and hard-fought process. Yet it is vital that single mothers have a plan in place to ensure that their financial future is secure. It is often extremely difficult to do future planning when month-to-month financial survival is paramount, but setting goals and achieving small financial victories can change attitudes and assist in personal growth.
As professional financial planners we go through a six-step process to assist you to plan and reach your joint financial planning goals:
- identify your goals – are you aware of your aspirations?
- gather information – do you have a retirement fund, risk protection, savings?
- analyse the information and involve you in the scenario planning, clarifying the maze of financial products and explaining the differences between pre- and post-tax savings.
- agree which goals are to be aimed for and the length of time required, for example, short-term debt reduction, bond repayment or creation of a savings buffer.
- implement the plans – actions speak loudest, so in a simple and logical way, we assist you in the start of new beginnings.
- review – we meet with you at regular pre-determined times to act as a sounding board and provide ongoing care.
If this process of joint financial planning strikes a chord with you, take the first opportunity you have to contact a CFP® professional and start the journey. You deserve it.
