We normally do not understand the long-term effect of our current decisions. Money is one of the most powerful tools we have to create the life we want. Yet, poor financial decisions can leave us vulnerable, stressed, and struggling to recover. If you want to build wealth and maintain financial security, here are five things you should never do with your money.
1. Get Married in Community of Property
Love is beautiful, but let’s talk about the financial implications of marriage. In South Africa, if you marry in community of property, everything you and your partner own – and owe – gets pooled together. This means that if your spouse has debt, you are legally responsible for it too (if they go under debt review for example, guess what, you, by virtue of your marital contract, are under debt review as well, if he has kids outside of the marriage and does not pay maintenance, yep, you guessed right, you are liable of taking care of that child(ren)! If they make poor financial decisions or get into trouble with creditors, your assets can be seized as well.
The best alternative? Consider an antenuptial contract (ANC), which allows you to protect your assets while still building a financial future together. You can even include the accrual system, which ensures that both partners share in the growth of assets accumulated during the marriage while protecting pre-marriage assets.
Different Types of Marital Contracts and Their Financial Impact
In Community of Property: This is the default marital regime if no contract is signed. Upon divorce, all assets and debts are divided equally, regardless of who contributed more. In the case of death, the surviving spouse is entitled to half of the joint estate, but this can become complicated if there are debts attached.
Out of Community of Property Without Accrual: This means each spouse keeps their own assets and liabilities completely separate. In the event of divorce or death, neither spouse has a claim on the other’s assets. While this provides financial protection, it can also leave one partner vulnerable if they did not accumulate enough wealth during the marriage.
Out of Community of Property With Accrual: This system allows each spouse to retain their pre-marriage assets, but any wealth accumulated during the marriage is shared upon dissolution. This is a fairer option as it protects each partner’s prior financial standing while ensuring equitable distribution of growth in assets.
It is very important to note that if you chose to get married out of community of property with or without the accrual system, you have to consult a notary (lawyer) BEFORE you sign at home affairs. While this does cost money, I think it is definitely worthwhile to budget for this very important document and not just focus on the wedding day which normally costs much much more!
Understanding these contracts is crucial, as they dictate how your finances will be handled in case of death or divorce. Consulting a legal professional before marriage can save you significant financial stress in the future.
2. Take on Credit in Your Name for Someone Else – Redflag!!!!!
It’s one thing to help someone financially when you can afford it, but taking out credit in your name for someone else is a huge financial risk. If they default, the debt is legally yours, and it will be your credit score and financial future on the line.
Many people have found themselves ‘blacklisted’ or in deep financial trouble because they opened accounts for friends, partners, or family members who didn’t pay up. Protect your financial stability and say NO to this request – no matter how much you care about the person asking!
3. Lend Money to Friends and Family
Mixing money with relationships is tricky. Lending money to friends or family can put a strain on your relationship, especially if they fail to pay you back. It can create awkwardness, resentment, and even lead to broken friendships or family disputes.
If you really want to help, consider gifting the money instead – but only if you can afford to lose it.
4. Ignore SARS!
The South African Revenue Service (SARS) does not play games! Ignoring your tax responsibilities can lead to severe penalties, audits, and even legal trouble. Whether it’s filing your tax returns late, under-declaring your income, or failing to keep track of your deductions, it’s crucial to stay on top of your taxes.
Make it a habit to check your tax obligations annually, keep all necessary documentation, and seek professional help if needed. Tax evasion is not only illegal but can also damage your financial standing and future opportunities.
5. Give Up Your Power – Don’t Be a Damsel in Distress
Financial independence is key to a secure future. There is a growing trend on social media of "trad wives"—women who take pride in not knowing how to pay bills, manage bank accounts, or handle household finances. While this may seem cute or romanticised online, it is incredibly dangerous in reality. Many women have found themselves financially stranded after divorce or the death of a partner because they had no idea about their financial situation.
Whether you’re married, in a long-term relationship, you must know what’s going on with your money. Make it a point to stay informed about your household finances, know where the investments and insurances are, understand the family budget, and be actively involved in financial planning. A man is not a financial plan – take charge of your financial future!
Money mistakes can have long-term consequences, but by avoiding these five pitfalls, you set yourself up for financial success and independence. Protect your assets, make smart financial choices, and always stay informed about your money. Your financial future depends on the decisions you make today!
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