A global 2023 Credit Karma study revealed that 33% of Gen Zs and 31% of millennials have ended relationships over financial disagreements. Additionally, 56% of Gen Zs and 61% of millennials report frequent money-related arguments in romantic relationships. Duma Mxenge, Head of Business and Market Development at Satrix, says open communication and financial alignment are essential for couples to navigate financial hurdles and invest towards their future together.

Mxenge says couples should discuss their investment goals and risk tolerances to ensure they achieve their financial objectives, whether married, living together, or planning a future together.

“Communication is critical in any relationship, especially regarding financial matters. So, when investing as a couple, partners should discuss their financial goals, values, and risk tolerance early in the relationship. Having these conversations sooner rather than later can help avoid future issues and help couples establish financial harmony.”

Discussing Risk Appetite and Investment Goals

One of the first steps to achieving financial harmony, according to Mxenge, is defining your goals based on your relationship’s life stage.

“If you don’t have kids, then your individual values will likely drive your investment decisions, like one partner prioritising travel while the other values furthering their education. It’s about finding alignment with each other’s top priorities. However, once kids enter the picture, the conversation shifts to how the couple envisions raising the children and what school they want to take them to, for example. Creating a financial legacy also becomes paramount.”

He says regardless of the couple’s profile, partners should discuss their top financial values and priorities and find a middle ground.

Balancing Risk In Joint Investment Strategies

Mxenge believes the idea of one partner taking on more investment risk while the other is more conservative has to do with the age difference between partners rather than individual risk appetites.

“If your partner is much younger than you, they can afford to take more risks because of their longer investment horizon. The older partner may need to be more conservative as they near retirement. For example, if I were 10 years older than my partner, I would encourage them to invest more in equities and take more risk because they’ve got time to reap the benefits of compounding. As the older partner, I would adopt a conservative strategy, because I’m trying to preserve the capital I’ve grown over the years.”

He adds that when it comes to joint investment accounts, the level of risk should align with the couple’s specific financial goal and time horizon. “For a short-term goal, it’s prudent to invest conservatively. But for a goal five to 10 years out, the couple can afford to take on more risk in hopes of higher returns.”

So, while a balanced approach between partners can work, it should be based more on where everyone is in their investment journey and stage of life.

Navigating Mismatched Financial Styles

Mxenge says couples with mismatched investment goals and risk tolerances should have proactive and intentional financial discussions, and even ‘financial therapy’ with an objective third party can help.

“It’s common for couples to have different money personalities. One may be a prudent saver, and the other more of a spender. However, if not managed, this mismatch can lead to major conflict. ‘Financial therapy’ with an objective third-party professional can help couples work through these differences and find a middle ground.”

Since money issues are a leading cause of separation, Mxenge says this form of mediation can be a relationship-saver. “Financial therapy is incredibly beneficial. I think every couple should do it. It’s where the couple speaks with a financial adviser well-versed in coaching to deal with the psychological and emotional side of financial planning and money. A financial therapist can help you work through mismatches in your financial habits, beliefs, and behaviours in a productive way. They have the expertise to guide these delicate discussions.”

In addition to therapy, Mxenge recommends that couples attend financial seminars together and then discuss applying the learnings to their situation.

Creating a Shared Financial Vision

While maintaining some financial independence is healthy, Mxenge says couples need to view their relationship as a partnership and work to co-create an overarching vision for their financial future together.  

He says for joint goals, like buying a house together, couples should be clear on the budget, the timelines, and each partner’s contribution. Having open discussions and regularly meeting with a financial adviser to review the household balance sheet can provide a helpful big-picture view and keep both partners engaged and aligned.

Mxenge concludes, “Couples should understand each other’s collective and personal goals, like funding a degree or starting a business. Openly discuss these individual and shared aspirations and how you can support each other. With transparent communication, a willingness to compromise, and some expert guidance, couples can thrive and grow together on their investment journey. The couple that invests together can harness the power of two in their investment strategy and set themselves up for long-term financial and relationship success and security.”

Disclaimer

Satrix is a division of Sanlam Investment Management

Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.

Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities.

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.