While traditional wedding vows might include "for richer, for poorer", for many married couples in the UAE, their union is an opportunity to combine their finances and speed up their long-term financial goals.
When it comes to marriage and money, both experts and couples agree that honesty and a system of checks and balances are key to reaching those goals.
Couples in the UAE who have combined their finances say this leads to greater accountability for their spending and saving habits, while helping them to make financial decisions together.
This is backed up by a 2018 survey by financial services firm Fidelity, which found that the top three money tips for newlyweds include saving as early as possible for retirement, not taking on more debt than they can afford and making all financial decisions together.
According to financial experts, the joint management of income, expenditure and savings ensures that couples understand their financial position and adhere to their savings objectives.
Joint accounts can also be a good way to combine capital and benefit from greater compounded investment growth over time, while combining money within the same account also allows couples to enjoy the perks offered by premier banking services and reduced fees, experts add.
However, joint finances also come with certain disadvantages. If the male spouse dies without a will in place in the UAE, Sharia law dictates that assets, including joint accounts, will be passed to the closest male relative and this may render the surviving female spouse without funds.
Steve Cronin, founder of DeadSimpleSaving.com, says: "In the UAE, there have been cases where the joint account has been frozen when one person has ended up in a coma or died. This has caused significant additional stress for their other half."
Couples can circumvent this by opening an offshore account, experts say.
“By opening a joint offshore account, funds are retained outside of the UAE probate system," says Stuart Ritchie, a chartered financial planner and director of AES International. "Thus, the survivor is able to access funds normally once the death certificate has been provided. This is vital as it ensures that the surviving spouse retains access to their capital and can continue to support their lifestyle in this difficult time.”
In addition to a joint account, Mr Cronin advises that couples “should also both have your own bank account with enough money to get by for a month or so”.
Mr Ritchie says women also tend to benefit from greater financial security when they combine their finances.
"Women within periods of maternity, or who leave employment to take care of children, could benefit from joint finances in order to support their family's day-to-day living. Joint accounts can also benefit their psychological and financial well-being, particularly for women who are accustomed to earning an ongoing income," he tells The National.
But joint finances could also cause marital tension if one spouse does not adhere to the expected spending and savings plan.
“In the event of divorce, joint accounts can add an additional layer of complexity to a financial settlement. Prior to divorce settlement, there are no restrictions as to how much a joint signatory can draw from the account,” cautions Mr Ritchie.
According to a Divorce and Money study by Fidelity in January this year, having the right roadmap can reduce the financial stress of a breakup. For most people, once the divorce decree is signed, the financial aspects can be the most difficult to deal with, the study found, with more than one third of respondents (35 per cent) saying that five years after the divorce, they have yet to fully recover financially.
Here, we talk to three couples about the pros and cons of their combined finances.
Couple who wants to retire early
Jerome Van Herpe and his wife, Mabelle, combined their finances after they were married a year ago. Mr Van Herpe, from Belgium, works as the head of development in a software company, while his wife, from the Philippines, is a nurse in Dubai. The couple has a four-month-old baby.
The duo decided to be more careful with their finances when Mrs Van Herpe became pregnant.
“We share the main account where my salary is deposited and she contributes whatever she can after her obligations towards her family back home. It usually amounts for a part of the salary for our nanny,” says Mr Van Herpe, 32, who earns more than his wife.
Mrs Van Herpe, 33, says having a joint account has taught the couple to be more mindful and responsible with their money.
“I don’t buy expensive things anymore and he influences me to be more humble in my spending habits. I don’t spend like I used to when I was single because now I think about our future goals,” she adds.
The couple plan to retire early and hope to have sizeable earnings by the time they are 50. “We don’t plan to work all our lives. We want enough money to enjoy our retirement life,” Mrs Van Herpe says.
Although Mrs Van Herpe has a credit card of her own, her husband has also given her a supplementary card linked to their primary account. “Because she is not entitled to the same card as me, this supplementary card gives her more perks while shopping,” says Mr Van Herpe.
The couple plan their finances using Excel sheets to track expected expenses and allocate a budget for groceries, restaurant visits, financial obligations, investments and travel-related savings.
“If it’s a sizeable purchase made from the joint account, we consult each other, but not for miscellaneous spends such as on a haircut, etc. I tell her if she is going overboard with expenses in a particular month,” he adds.
While Mr Van Herpe has property investments in Belgium, his wife has a house in the Philippines and also pays for an insurance policy. They also have private bank accounts in their respective countries. “We don’t look at our investments as private, they are for the family as a whole,” explains Mr Van Herpe.
While he admits that their combined finances have resulted in a loss of financial independence, he says he has come to terms with it. “For instance, before the wedding, I wouldn’t have thought twice before splurging on a one-week diving holiday. Now, as a couple, we have both financial and life goals together.”
The couple plan to be in Dubai for three more years. “Because Dubai offers tax-free salaries, we are able to live a good life but still save well. If we do not spend at all, we can retire five years earlier. We are not outside partying at expensive clubs every weekend, we’d rather just go to a good restaurant. We don’t need luxury, we just need plentiful,” adds Mr Van Herpe.
This couple saves hard for a rainy day
Anand Singh, 33, and his wife Radhika Singhal, 32, are building up their emergency fund for a rainy day and to settle the mortgage on their UAE property early.
The couple combined their finances after they were married in 2015. Both lawyers, they have separate accounts for their salaries but manage all their expenses and loan payments through a joint account.
“We bought a house in The Springs in Dubai in 2018. So, the mortgage EMI, car loan payment and credit card payment get deducted from our joint account,” says Mr Singh, who works with a private practice.
Although the couple, who are originally from India, is accumulating money in their joint account to pay off their mortgage as early as possible, they are keener to have liquidity to tide over market uncertainty due to Covid-19.
Mr Singh says having a joint account is like “a system of checks and balances”.
“When one spouse goes over the budget, the other person steps in with a reminder," he says. "There is someone else to lend me a different perspective. My personal decisions can be more impulsive."
After accounting for their mortgage and other fixed bills, the couple allocates 70 per cent of their monthly earnings to the joint account.
The couple also has sufficient money in their separate accounts, so if there is something they really want to spend on, they can do so.
“We are more conscious about how we spend our money in the Covid era," says Mr Singh. "We want our rainy day funds to be a bit more. We used to travel frequently before the pandemic. That has stopped, so we are able to save more now."
Mr Singh says he remits money to India from his personal account because he has a separate savings scheme there and a property that he is still paying off. He also has a few credit cards in his name that get paid out of his personal account.
Joint account promotes trust for this couple
Chinmaya Relan, a claims manager with Bowring Marsh, believes transparency about money is a very important part of a relationship to avoid disputes. He has had a joint account with his wife, Nisha, who works in real estate, for five years.
“My wife gets her salary in her account but we transfer that completely to my account. We have a joint account to manage our finances. Bills are paid from the combined account,” says Mr Relan, 35, who has been in the UAE for six years.
The insurance professional says that maintaining a joint account helps to have complete transparency with his spouse. “For instance, when we remit money home for our respective parents, there is an atmosphere of openness and both of us can view each other’s transactional history,” adds Mr Relan.
Mr Relan believes that complete openness about finances augers well for their relationship and the couple makes all their investment decisions collectively.
“We consult each other and what one spends is always known to the other. We have conversations about finance all the time,” says Mr Relan, who has invested in insurance and a property in India.
What the experts recommend
It is important for couples to have challenging conversations about money and make important decisions about planning, saving and investing together.
"Many studies have shown that two heads are always better than one for financial decision making. Having one person who is more of a risk-taker and one who is more risk-averse, or one who is a big spender and one who is more controlled, will balance out for a better overall outcome," recommends Mr Cronin from DeadSimpleSaving.com.
Often, when couples do not handle finances together, one spouse may not know what the other half is spending money on.
“They may be spending more than you realised," Mr Cronin says. "They may be investing your money in a risky way, or using a financial adviser that you wouldn’t use if you dug a bit deeper. It’s too late to get involved 10 years later when you discover a lot of money has been lost. This happens far more often than you would think.”
Mr Ritchie of AES International recommends all UAE expats to hold the bulk of their cash, savings and investments in offshore savings and investment accounts to ensure that assets are passed efficiently to their spouse in the event that something happens.