According to research conducted by Statistics SA, four out of 10 marriages end in divorce before their 10th anniversary.¹
No couple believes on their wedding day that their newly minted union will end in divorce. The stark reality is however that just under half of marriages in South Africa do not last 10 years. And many of us have little to no understanding of how our various assets will be split up if it happens or how this will impact our financial journey.
This is according to Janine Horn, Financial Adviser at Momentum, who points to the role the pandemic has played in the recent rise of divorce cases: The DIY Legal revealed that divorce rates soared to 30%, while highlighting that South Africa ranked 83rd out of 154 countries for highest number of divorce cases last year. With financial pressure being one of the key drivers of relationship breakdowns, the current economic situation has intensified the strain on relationships.
“Divorce can be a painful and traumatic experience for everyone involved. The financial implications can also be devastating and often result in both partners having to significantly lower their standards of living post-divorce. Negotiating the splitting of assets can also cause turmoil,” says Horn.
During the upheaval of negotiating the asset split, maintenance and the custody of children generally take priority. A divorce is never going to be easy, but Horn believes there are steps a person can take to ensure that it runs as smoothly and as swiftly as possible, enabling both parties to move on with the next chapter of their lives.
She provides the following advice for couples to consider when structuring their finances:
- Take a ‘coupled’ approach to financial management: Many women allow their partners to take the lead on financial matters, getting involved only when necessary. As with everything in a successful marriage, finance and budgeting should be shared, with couples making important decisions together.
- Take preventative measures: Although it’s never a pleasant thought when you are planning a wedding and life together, ensure that you have your own medium-term and retirement savings vehicles, as well as a prenuptial agreement in place before you get married. This will ensure financial independence should the relationship fail and ensure that you are in a relatively sound financial position.
- Don’t merge all finances: Couples often merge all their finances after marriage, which is not the best way to ensure that you stay financially independent. Although a joint approach to finance should be taken by married couples, certain aspects should be kept separate. Try to keep transactional banking accounts separate and start a joint saving account for shared household and living expenses.
“Having a long-term relationship with a professional financial adviser who will offer appropriate advice is paramount to reaching one’s financial goals and ensuring that even through life changes one is able to make necessary financial adjustments.
A holistic financial plan is vital to allow clients to live their best lives while knowing that future uncertainties are taken care of,” Horn concludes.
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