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United as One Heart One Soul and…One Balance Sheet!

It’s still the love month and today I’m giving a mini workshop to select bloggers and their partners about something that’s not comfortably discussed: MONEY.

In a recent survey on Relationship Index among 10 countries in Asia, the Philippines ranked number one in expressing their love to their partners, but also ranked on top in the frequency of arguments. And guess what the top cause of conflict is? MONEY!

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The Prudential Relationship Index 2016. Complete results of the survey available for download (English and Tagalog versions) at https://www.prudentialrelationshipindex.com/ph/

 

When you enter into a marriage contract here in the Philippines, you and your partner become united as one, not only in heart and soul, as our wedding ceremonies always remind us, but also one balance sheet!

Unfortunately, based on my informal survey, it’s possible that over 90% of those who sign the marriage contract don’t know what they’re signing the rest of their life for. Go ahead, ask couples about to get married if they’ve discussed this potential number one stressor in their future life together. Chances are, they have not, but guess what? They are so deep into their wedding preparations already, deciding on every tiny detail of their giveaways, their first dance as a couple, guests’ seating arrangement, and many more, without having any clue about the Family Code that will govern their marriage. They’ve seen their wedding coordinator, couturier, photographer, videographer, make-up artist, and other suppliers but have not talked to someone who can help them with their future finances.

Why is this the usual case? Because we still lack that level of comfort to bring up conversations about money. It’s true. According to a book I just finished entitled Own It by former Wall Street big wig Sallie Krawcheck, women are even more comfortable talking about their sex life with people they just met than about money! And so majority of couples enter into marriage without discussing thoroughly about money.

Honestly, my husband and I signed our marriage contract 27 years ago just with a vague idea about what was going to happen with our respective assets. Maybe because we were the typical young couple in love with little or no properties to consider. But with the rate of separations these days, it is of utmost importance that every couple considering marriage understands what it is getting into. In fact, even with forever in our mind, heart and soul, and even if we are already married, it is imperative that we understand the law that governs our union.

 

The Absolute Community of Property vs. Conjugal Partnership of Gains

The Family Code was signed into law on July 6, 1987. The effectivity of the code is one year after signing which is August 3, 1988. Thus, if you got married prior to August 3, 1988, your marriage is still governed by the Conjugal Partnership of Gains (CPG). Under this law, the spouses retain ownership of properties owned prior to the marriage. Only the fruits or income derived from these previously acquired properties will form part of the common pool or conjugal property. Then all other properties acquired by either spouse during the marriage will likewise form part of the common pool.

Starting August 3, 1988 under the Family Code, marriage in the Philippines is governed by the Absolute Community of Property (ACP). Under this law the husband and wife become co-owners of all the properties they bring into the marriage and those they acquire during the marriage. This means that even those that you inherited from your ancestors, and those you bought while still single will form part of the ACP.

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What law governs your marriage? You can save this image for easy reference.

 

There are three exceptions to the ACP. Here they are:

  1. Properties acquired during the marriage by gratuitous title or, in layman’s language, donation given to either spouse, except if the donor stipulates that the donation also forms part of the ACP. I’ve heard of wealthy families donating to their biological child after the wedding in order to keep the ownership exclusive to the child.
  1. Property for personal and exclusive use. Of course, your clothes, underwear, etc. do not have to form part of the ACP anymore. Note however that jewelry forms part of ACP. Expensive bags are not yet considered jewelry so those still go to the personal property category. emotcon1
  1. Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage and the fruits or income of such property.
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What are the things that don’t form part of the ACP? You can save this image for easy reference.

 

Knowing what you know now…

Whether you’re about to get married or married, it is good for you to sit down as a couple and discuss about money. Some would say, “But we’re okay, my husband is a good provider. Talking about it might just invite trouble.” Unfortunately, even if you have been money problem-free all these years, you can never be sure that it will be the case forever. The thing with money is that it’s very much like health. We don’t really bother to think about it until some problems start showing up. And again, just like our health, it’s best to be proactive and start taking care of our financial condition while we’re young and have enough time, because chances are when the symptoms start showing, it may already be too late.

Start with your life goals then proceed with the money discussion, “How do we fund all these wonderful goals?” Which ones are long-term? Medium-term? Short-term? It would be good if husband and wife are looking at the same road map when heading towards a certain goal, right?

Prepare your Balance Sheet. It does not have to be an elaborate one that might remind you of your debit/credit nightmare in Accounting. Make it just a simple listing of what you own and what you owe, so that you can come up with your Net Asset Value (NAV). NAV is Total Assets less Total Liabilities. This will help you have a clearer grasp of where you are in your financial journey.

Then have periodic assessments. Maybe on your wedding anniversary, include a bit of time to see where you are in your goals, including financial goals.

Remember, you are united as one heart and one soul and… one balance sheet!

Cheers to a healthy balance sheet that contributes to a healthy love life! wallet-icon

 

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ANNOUNCEMENTS

  1. Watch FQ Live! today at an earlier timeslot 10:55am as we shall broadcast my talk from the venue Frank & Dean Café today. This is a mini workshop for the blogger friends of Pru Life of UK, in line with their Prudential Relationship Index

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  1. Money is the number one cause of marital conflict. So get that out of the way by discussing money in a healthy manner with your partner. Take the FQ Test together. Click link to take the test.poster
  1. I will give a talk at the Alumni Connect on March 25, 2017 at the Decagon Silver City.

Rose Fres Fausto is a speaker and author of bestselling books Raising Pinoy Boys and The Retelling of The Richest Man in Babylon (English and Filipino versions). Click this link to read samples – Books of FQ Mom Rose Fres Fausto. She is a Behavioral Economist, Certified Gallup Strengths Coach and the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook and You Tube as FQ Mom, and Twitter & Instagram as theFQMom.

ATTRIBUTIONS: Images from Pru Life UK study, wallpaperhd.pk, PngPix, ClipartFest put together to help deliver the message.



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