Are you and your partner financially compatible?
Chances are, if you ask a couple the questions, “What made you fall in love with each other? What keeps your relationship strong?” you will probably never hear the answer, “Our shared money values.” I don’t think so, that sounds too materialistic and unromantic. But the truth is, shared money values is a key element in a successful relationship, especially that of marriage.
When you enter into a marriage contract here in the Philippines, you and your partner become one, not only in heart, mind and soul, as our wedding ceremonies always remind us. You also become one pocket, one pool of assets! But no one says this explicitly, and almost always, people sign into this permanent contract without really knowing what they’re getting themselves into.
In a mini survey I conducted, majority of the respondents do not know the laws that govern the ownership of their properties as a married couple. Honestly, my husband and I signed our marriage contract 25 years ago just with a vague idea about it. Well, 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 and heart, we are still better off understanding what we get ourselves into in marriage.
The Absolute Community Property vs. Conjugal Partnership of GainsIf you got married prior to July 6, 1987 your marriage is 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 July 6, 1987 under the Family Code, marriage in the Philippines is governed by the Absolute Community 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 acquired while still single will form part of the ACP.
There are three exceptions to this:
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.
2. Property for personal and exclusive use. Of course, your clothes, underwear, etc. do not have to form part of the ACP anymore; it’s not hygienic. Note however that jewelry forms part of ACP. Expensive bags are not yet considered jewelry so those still go to your personal property.
3. Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage and the fruits or income of such property.
Side story on the two laws: Back in the early 90s, a lawyer friend told me the story of his wealthy friend who consulted with him prior to marrying her D.I. (Dance Instructor) boyfriend. She recognized the huge gap in their financial conditions but didn’t want to hurt the boyfriend by being too detailed in the Pre-Nuptial Agreement. So what my friend advised was this: Just sign an agreement that simply states, “This marriage shall be governed by the Conjugal Partnership of Gains.”Clear and simple, no need to enumerate which property goes to what pool, and it eliminated the risk of hurting anyone due to sensitivities on the issue of money.
The importance of Financial Compatibility in a Marriage
I hope by now, after going through the absoluteness of what you get into upon signing that marriage contract, you realize that financial compatibility is of utmost importance for a marriage to be successful.
You may still argue that hey, I never knew any of those but look I’m happy with my spouse, money is never an issue in our marriage. To that I say, maybe it’s because you never encountered money shortage yet, or other money conflicts, or have never had to consider what’s going to happen if one spouse dies, or if there’s a need to separate your assets legally for any reason.
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.
What is financial compatibility?
Financial compatibility is not so much about having the same Net Asset Value prior to marriage (although that would be a big help because no one will likely feel shortchanged getting into the Absolute Community Property). It is more about having similar money habits and common financial goals. It is having the same Financial Belief and Value System.
But are there really two people who share the same money values? The answer to that is pretty much the same as when we’re considering compatibility in the other aspects of a relationship. You don’t have to possess identical ones but similar values are important because remember, you two will become one upon marriage. Ask questions like What are your spiritual beliefs? What are your core values? Do you like kids? How’s your relationship with your parents? What are your goals in life? What kind of life do you want to live? What do you stand for? In the US, the answer to the question, “Are you a Republican or Democrat?” could be a deal breaker in a marriage. At least in our country, we don’t have party loyalty. Maybe the closest we have to that is “Are you a Noranian or Vilmanian?” but the younger generations don’t have that polarizing effect anymore.
Kidding aside, getting your financial acts together is a must prior to marriage.
When should you start discussing money as a couple?
They say in dating there are no-no topics on your first date like past relationships, political beliefs, religion and money. We avoid these because they are too polarizing and too personal. But if you’re already on your nth date and getting interested in the other, I think you have to talk about something else other than the weather and other lame topics. It’s time to talk about the things that matter in building a strong relationship.
Prior to that, keen observation is key. You can see how he/she is in these important aspects of life like spirituality, finances, etc. in the nuances of his/her behavior, how he/she spends time, etc. Do not wait until the proposal before you understand these important matters.
That is why it’s important to attend seminars and workshops on couple compatibility. There are those conducted by different groups like the Discovery Weekend. They make you look deeper beyond your starry eyes and compel you to answer questions honestly and make you understand what you’re getting into. I think the topic on money is also touched in some. For already married couples there are seminars like Beyond I Do.
We bother a lot about preparing for our wedding. It’s a big production number and most couples hire all sorts of wedding specialists, suppliers and what not. They spend plus minus a million pesos for a day’s pageantry. I think they ought to spend more time, energy and resources in preparing for the marriage itself. And for the romantics, I hate to burst your bubble, but the money part is way too important to ignore, regardless of your financial condition. It’s a sensitive matter and will eventually involve beyond the married couple so it’s better settled prior to I do.
There are many more things to discuss about this topic, but I’ll stop here to allow you to digest the above discussion. Tell me what else you want to know about this topic and I’ll tackle them in future articles.
For the meantime, couples out there should ask the question, “Are we financially compatible?” If the answer is no and you’re about to get married, it may be worth taking a pause and working on your differences before you take the plunge. If you’ve been married and the answer is still a no, then please have a heart-to-heart talk to reconcile your differences. Start with your financial goals and make the necessary adjustments. This way, it does not become an attack on the spending habits of the partners but a way to achieve your goals together.
Cheers to a financially happy union!
ANNOUNCEMENT: You may watch the episode on Financial Compatibility on ANC On The Money on iwantv.com on demand. It was aired on August 26, 2014. My husband and I discussed this topic and answered some questions from the viewers.