Tying the knot takes a back seat

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Many young and middle-aged couples are opting to delay marriage – and the big wedding – to buy property and/or pay black tax

STATISTICS South Africa’s 2019 data suggests the median age for marriage in this country is rising, says Lee Hancox, the head of channel and segment marketing at SanlamConnect. For grooms, it went from 36 in 2015 to 37 years in 2019, and for brides, from 31 to 33.

On the other hand, the average age of a South African first-time homebuyer has dropped to 34 years, she says, citing Chas Everitt data.

“Is there a correlation between the two? Quite possibly. We can’t conclusively say so, but there does seem to be a trend of young people delaying marriage – or opting for a small ceremony – in order to afford a home or really nice honeymoon.”

Relaying her experience, Hancox says her first wedding was in a town hall hosting 150 guests. After getting divorced, her second wedding was “much more intimate, with just 21 guests in a forest”.

“It’s important to consider what you want and why. It should not be about peer or family pressure. Social media has made it hard to keep things small these days as there are so many pictures of people jetting off for perfect weddings overseas. But you never hear about the debt they go into to do so.”

You need to remain objective, consult a financial adviser, and be realistic about what you can afford, and what your priorities are – now and in the future – and how you plan to achieve them.

From a South African perspective, John Manyike, the head of financial education at Old Mutual, says one of the major impediments to getting married is the issue of black tax and the obligations many feel they have towards their parents and siblings. “Essentially, many of South Africa’s new generation of young professionals are emerging from townships where families have made many sacrifices to help finance their educations. Cultural obligations run deep and young people with careers feel they must assist parents and siblings financially before they consider their own futures.

“Marriages can, therefore, be delayed until parents’ homes have been renovated, or until parents and younger siblings have suitable accommodation.”

When siblings have also been assisted and are financially independent, and financial obligations are shared, wedding plans can go ahead, he says.

“Big weddings are fine for people whose personal financial circumstances allow for ‘Hollywood-style’ celebrations.”

Decisions about weddings and “massive spending” on venues and celebrations should, however, be thoroughly discussed.

“As a wedding is a single event in what, hopefully, should be a lifetime commitment, couples should hold open and frank conversations about money,” Manyike says.

They should talk about:

• Present and future financial obligations: If they have debts, loans, and other commitments these should each be revealed and the implications of each examined.

• Goals: Their ambitions and the financial milestones they would like to achieve.

• Type of marriage: Whether they are going to marry in community of property or have an ante-nuptial contract that preserves their individual financial positions. The type of marriage will help determine the purchase of a home.

If married in community of property, both incomes will be considered when a home loan is discussed as the home would become the couple’s joint property. If only a single income is considered, the property would belong to one spouse, and the loan could be smaller.

“A wedding should be an event that can be afforded,” he says.

Hancox agrees, saying that couples who want both a big wedding and a property should draw up a shared list of nonnegotiables for the house and the wedding.

“See what you’re willing to forgo in order to cut costs.”

She says they should also:

• Start saving as soon as possible: Discuss a suitable savings vehicle with your adviser. You could even allocate a savings vehicle per goal.

• Use your resources – aka friends and family: If you know a seamstress, ask her for help with the bridesmaids’ dresses. If your aunt’s a baker, ask her to make you a cake as a gift.

• Chat to your financial planner as a couple, so you come up with a viable budget and savings plan: Make sure you’re on the same page in terms of what you can – and want to – contribute towards the house and wedding.

• If you have a long engagement, understand the effect of inflation on supplier pricing: It’s going to go up – have you budgeted for this increase?

• Consider the changing repo rate: Work with a financial adviser to really think about the bond you can afford – now and in the future.

• Put an antenuptial agreement in place: Understand what works for you both. You need a lawyer for this. Remember to ask about tax benefits for estate planning. Update your wills at the same time to cut down on potential estate duties and costs.

• Have a bit of fat built into the budget for both the house and wedding: These things typically cost more than you think they will.

Starting a new life together and having to pay off loans taken out to pay for a wedding will soon take the shine off the event, Manyike adds.

“Unfortunately, the strain of paying off the debt could also result in stress that could sour relations between the spouses.”

He advises couples who want to have their (wedding) cake and eat it, to first understand the “naked financial truth” about each other. It is only when full disclosure about assets and debts are made that couples can begin planning a joint financial future.

“If either, or both, of the partners have children, then the needs of the children, their education and other costs should be considered.”

The next step, he says, is to set short, medium, and long-term financial goals and strategies for achieving these.

“Starting a marriage with a qualified personal financial adviser helping to develop a plan is an investment that will pay dividends.”

He adds: “When it comes to relationships, honesty is the best policy. Starting life together and then finding out that your spouse has not been truthful about their financial position can end a marriage, particularly if you marry in community of property and suddenly find out that you are now responsible for 50% of your partner’s debts.

“Finally, my advice is to learn the difference between what you want and what you need. Having a focused plan and living on a budget will ensure that the important things – like a family home – come before luxuries, like fancy cars, that cost a lot but have values that deteriorate over time.”

YOUNG people with careers feel they must assist parents and siblings financially before they consider their own futures. PICTURE: EKATERINA BOLOVTSOVA