How to Keep ‘matters of the Heart’ from Derailing Your Finances…

As anyone involved in financial planning and wealth management could undoubtedly testify, emotions are usually public enemy number one when it comes to sticking to financial plans. While frightening news or industry generated information can influence people’s decisions, it is more often the major life events – and the resulting emotional upheavals – that lead to financial plans going awry.

In the first of these articles, we will address two ‘matters of the heart’ that greatly influence our financial decisions: marriage and divorce.

Marriage: Why think about Practicalities?

It is very natural, in the euphoria of a blossoming romance, not to give enough thought to how the other partner views money and finance. These usually seem like unimportant details and boring discussions to have when there are weddings, honeymoons and new homes on the horizon. Yet it is very important to have the ‘money’ discussions before getting married  – and to have a plan as to exactly how the finances are going to be managed.

“When getting married, couples tend to get caught up in their romantic fantasies,” explains Hilda Croxford, Johannesburg-based clinical psychologist. “They think divorce will never happen to them and neglect the practicalities of how money and finances will be managed.”

Indeed, if it eventually comes to that – which sadly, it often does – couples are then left with a messy situation that requires a great deal of untangling.

Divorce is usually a devastating event – not only emotionally, but financially as well.

“The way in which finances were managed in the marriage, is the way in which finances tend to be managed in the divorce,” notes Croxford. “The same attitudes prevail…”

Having watched many clients going through a divorce, I have noticed some common outcomes that could potentially have been avoided with smarter financial planning upfront….

Common amongst the injured party is the display of one or more of the following emotions:  anger, resentfulness, fear, rejection, loss, sadness, and aggression. This has led to a need to control their financial matters, in particular if they have not been that involved in the finances in their marriage and have left it to their spouse.

This, in turn, can lead to listening to friends and family in the attempt to make sense of things. Whilst these friends and family can be very well meaning and have their best interests at heart, unless they are professionals or particularly good at financial planning, it can lead to bad financial decisions. It is better to take a step back and not to make any major decisions until the dust has settled and they are emotionally stronger.

In short, people can easily guard against the financial devastation that tends to occur when life takes its unexpected twists and turns. It just requires a little bit of rational thinking – and savvy planning – from the get go…