Joint Financial Planning – with Women in Mind

Joint Financial Planning – with Women in Mind

It is 2014 – and women are better educated and more empowered than ever before in the history of humankind.  So why do we see so little truly joint financial planning? When push comes to shove, we find surprisingly few women are actively involved with the financial planning of their families, whether they are married or in long term relationship. Although they are often involved in the traditional role of taking care of monthly budgets, groceries, schools fees and household management, they still take a back seat when it comes to estate planning and investment strategy.

Why the need for Joint Financial Planning?

Marriage or a lifetime partner relationship involves complete trust and inter-dependence upon one another, and of course that is a good thing. However, the reality is that many couples do split up, which can leave one partner – unfortunately still usually the wife – financially exposed and under planned at the worst possible time.

Money matters affect everyone and reach every corner of our lives so it comes as no surprise that ‘financial issues’ are often cited as one of the fundamental reasons for failed relationships. Given this fact, joint  financial planning for women in particular becomes a burning issue. There is no doubt that it makes sense to involve both partners in all the long-term financial planning for couples in committed relationships. However, this reality is often overlooked.

It’s very common to find that all the decision-making is left to one person

In South African circumstances, it’s still generally the man who is left to manage a couple’s finances, even though the impact of decisions will affect both partners. The advantage of joint financial planning is that it creates an ideal opportunity to focus short-term hardships into long-term successes. It gives both parties additional areas of opportunity and importantly provides shared responsibility for the future growth of their partnership and family.

If it is true that today’s woman is financially sophisticated and realises the importance of standing financially on her own two feet, why is it that many are reluctant to be involved in joint financial planning? If you are living off two incomes and only using one partner’s income to provide for all your future financial requirements, you may find a substantial decrease in your lifestyle when you retire due to insufficient capital being available. You will need about 70% of your final income increasing every year by the rate of inflation to maintain your pre-retirement lifestyle. This means that you will need to be a member of a typical retirement fund for at least 30 years. Regardless of the size of your income, your strategy to maximise achieving your financial goals, should incorporate the household income from both parties.

Statistics show that health-related expenses rise as you age

The aging process is not always kind and statistically as you get older you are likely to have more major health-related expenses. As financial planners 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.

Women may now outlive their husbands by as much as ten years

If trends continue, as a woman you may live eight to ten years longer than your husband, even if you are the same age. It is therefore important that you insist on joint financial planning, and are involved in every stage of such financial planning; it is all too likely that you will need to be independent one day and it’s best to become familiar with all your financial affairs long before it becomes necessary to assume sole responsibility for them. Ageing and bereavement are challenging enough without adding a steep financial learning curve into the mix.

Joint financial planning – minimum requirements

As an absolute minimum, you need to be aware of some of the following:

  • that both your Will and your partner’s are up to date
  • that there is sufficient estate cash flow sufficient should one of you pass away
  • what financial precautions are in place should one of you suffer a dread disease or disability
  • whether you are appropriately investing in line with your long-term retirement goals

If what you have read about joint financial planning with your partner or spouse makes sense, but you are not sure of the current status of your financial affairs, take the first opportunity you have to contact an independent financial planner and start the journey – you deserve the peace of mind!

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