How your relationship status can affect your finances

Your relationship status can affect your finances, even if you live in a so-called ‘DINK dream’ when two people in a relationship both earn well and do not have any child-related expenses, or if you identify as a SINK, someone with single income who has no children or other dependants.

“Being part of a couple does not necessarily mean that you will have more disposable income or fewer money worries,” Liezel Gordon, client engagement and team lead at Metropolitan GetUp, says.

She says you must consider your personal circumstances. “Do both of you work, earn and contribute to expenses? What standard of living is important to each of you? Is one of you experiencing financial trouble and how does this impact your partner?

“When defining a ‘comfortable life’, it is important to take the full picture into account: both income and expenses, as well as lifestyle and aspirations.”

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Gordon says your relationship status affects what you need to consider from a financial standpoint.

SINK or swim

Wether you are a SINK or SIWK (someone with a single income but also has children or dependants), Gordon says the biggest concern is what happens if things go wrong? “The risk here is that you have only one income stream and no second income to fall back on.”

It sounds depressing, but it is prudent to make a list of the possible risks your specific SINK or SIWK status entails and once you have a clear picture, you can plan your finances accordingly.

“This could include risks such as possible disability. If you, as the sole breadwinner, become disabled, is there money to make changes to your home or maintain the living standard of family members?”

Gordon says divorce or the death of the breadwinner is a key concern, especially if there are dependants to consider. It is therefore extremely important for SINKs and SIWKs to prioritise financial protection, even if finances are tight.

Financial products, such as life and funeral cover, as well as income, critical illness and disability protection are vital and while a will is important for everyone, it is especially important for those who are sole breadwinners and have dependants to consider, she says.

SIWKs are usually excellent at adapting their family’s lifestyle to a single income. “My challenge to single-income households is for the non-earning partner to stay on top of the household finances. If something happened to the breadwinner, the non-earning individual would have to take over the family’s finances, which is extremely daunting if the non-earning partner were never expected to play any role in the management of the household’s finances before.”

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DINK again about relationships

Gordon points out that for DIWKs, who have a double income with children or dependants, it is important to account for the home support-related expenses incurred by both partners working, such as childcare, which can be costly.

“Someone might have to be paid to collect children from school and take them to extra-mural activities, while other expenses could include homework support and housework.”

While two incomes could allow for greater peace of mind regarding finances, Gordon says it is still important to prioritise income protection, life and funeral cover and having a sound will in place, as it can still be a significant blow to the family if anything unplanned, such as disability or death happens.

Gordon warns that you should not think because you are part of a DINK unit you have got nothing to worry about either. “Expenses can be shared among partners, putting less of a burden on one individual and generally resulting in more disposable income to enjoy.

“However, if one person in the relationship has higher expenses due to lifestyle, medical or other reasons, relative to their income, it might not always be that straightforward.”  

Gordon says there is a challenge for dual-income households: Why not try to see if you can live off one income and save the other person’s? “This has so many benefits and it brings you so much flexibility. By allocating a single salary for expenses, you could use the other income to build a nest egg.”

The idea is to use that second income to gain financial freedom. “However, it is important to ensure that both parties’ names are on whatever vehicle is used to save that income, otherwise one person may find themselves with nothing should there be a divorce or break-up,” she warns.