Building wealth as a couple means agreeing on shared financial goals and making deliberate decisions about earning, saving, investing, spending and managing risk.
Financial literacy expert Patrick Wameyo says that building wealth as a couple involves acquiring and maintaining income-generating assets. This also includes reviewing and adjusting investments as the business environment changes and as the couple’s willingness to take risks changes.
He says that having shared financial goals helps couples agree on an investment strategy that can provide the income they want. Lack of alignment can lead couples to miss opportunities, misallocate funds and make losses.
Before building wealth together, he encourages couples to discuss their expectations and fears about money and investments.
Wameyo says that partners may have different levels of understanding of investments because they were raised in different backgrounds and may have different attitudes towards risk.
“Openly discussing expectations and fears and receiving professional advice can level the ground towards a common understanding of the investment approaches that will work towards their common goals,” he says.
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Couples can identify their individual and shared financial priorities through discussions guided by a professional who can help them understand each other’s preferences. Those with different money habits, Wameyo says, can find common ground through discussion and learning through experience.
The first step towards building wealth together is to develop a written financial plan that sets out the couple’s objectives and strategies. The plan can guide their short-, medium- and long-term financial goals.
“Whether couples choose to combine their finances, keep them separate or use a combination of both, what matters is the discipline levels of each other. Whether the finances are separate or combined, indiscipline of one partner will lead to disagreements,” Wameyo says.
He adds that partners should divide financial responsibilities; for instance, running the home affairs can be for the woman of the house, while certain roles are more likely to be carried by the man of the house. However, he says that there are no particular guidelines. In certain households, the woman may be the better planner.
For couples with unequal incomes, he says financial goals should guide how money is allocated.
He advises having an emergency fund before beginning to invest to help with disruptions to regular cash flow that demand more funds than can be met by the available cash flow.
“Some of the accessible ways for couples to start investing together are a plan that will determine what and where the couple starts. When the couple have a low ability to take risks, they should generally buy low-risk assets,” he says.
The financial plan should guide how much couples need to save over time and what investments they choose. It should set out the expected returns, investment objectives and strategies, as well as the assets to be purchased.
He advises that couples should also budget for enjoying their lives while building wealth. Every aspect of life, including entertainment and other enjoyments, should be included in the budget as part of the investment plan.
“The financial risks are all identified at the time of preparation of the plan. This becomes the basis for arriving at the appropriate portfolio return given the couple’s ability to take risks identified,” he notes.
Couples can build wealth together through insurance and retirement planning. Retirement planning is also an important part of the financial plan, with investment strategies adjusted over time to reduce risk as the couple approaches retirement.
Estate planning and wills can help ensure the smooth transfer of assets across generations and preserve wealth beyond the lifetime of those who created it. Wameyo notes that instruments such as trusts can also restrict the sale of assets.
“Couples can protect themselves if one partner loses their income by running family finances as opposed to an individualised approach,” he recommends.
They should keep records of their assets and the documents that prove ownership. These can include bills, bonds, title deeds and so on.
If one partner is more financially ambitious than the other, ambition should be balanced with knowledge. Otherwise, Wameyo warns, it can lead to significant losses. A financial plan can help couples manage disagreements about spending and investing.
Couples seeking financial independence can have family financial independence as the goal. Financial behaviours that threaten financial wellness should be identified and addressed through planning and deliberate action.