When you get married and start living with your spouse, you will inevitably share your finances as well. Even if you prefer your salaries in separate accounts and have individual credit cards, you will still share common expenses for the utilities, for food and for the kids. In this situation, you need to figure out how you will share these expenses.
There are different options for managing the shared finances. These include a shared bank account, a credit card for the household, an account for paying household bills and completely separate accounts. Consider the different options to ensure that you will manage your joint finances effectively.
Shared Bank Account
In South Africa, it is not possible for the two spouses to have equal rights over an account. One has to be the main account holder while the other spouse will gain signing rights. Both spouses will be able to use the account, but some issues may arise. If the main account holder passes away, the other spouse will not be able to access the funds as before. In general, in case you are married in a community of property, your individual account may also be frozen if your spouse passes away. However, you will be able to ask for this rule not to be applied.
At the same time, financial liabilities of the main account holder can be transferred to the account. In this case, they will affect the income of the other spouse if it is received into this account as well. For example, if the South African Revenue Service wants to collect unpaid tax returns from the main account holder, they can take the contribution of the spouse to the account as well.
Managing Finances Separately
It is perfectly possible for two spouses to manage their finances separately. The first thing which you will need to do in this situation is to decide how the expenses will be shared. A simple solution is for one spouse to cover all mortgage and related expenses such as home insurance premiums while the other spouse pays for food and utilities. In any case, you will need a precise budget. It is best if you estimate the costs for the coming month on the basis of those for previous months. Each spouse has to have clear understanding of his/her obligations.
Bill Payment Account
It is a good idea for both spouses to keep their current bank accounts, especially if they have good credit history and a stable relationship with their respective banks. In order to make things easier in this situation, you can open a shared account which will be used for paying the monthly bills only. You will put only as much as it is needed for paying the bills into this account. You can set direct debit order for easier management. With a standing stop order you will be able to control the account even more effectively.
Sharing a Credit Card
It is also possible to use a credit card instead of a bank account for paying the bills. You just have to ensure that you will have enough money left at the end of the month to repay the credit card debt so that you can avoid interest payment. This method for paying the bills may be cheaper as typically there are no transaction fees involved. At the same time, you and your spouse will still have to decide what chunk of the expenses will be covered by each of you.
At the same time, you have to be extra disciplined when using a credit card as you may be tempted to spend more than you can repay. Sometimes, you will not even notice that this is happening as you do not see banknotes disappearing from your wallet. The best way to avoid such problems is to prepare a budget-based plan for using your card and stick to it.
Overall, couples can manage their finances together effectively as long as they prepare a budget and adopt rules on spending.