Whether you’re getting married, having a baby or simply moving in together, you and your partner want to create a firm foundation for a long and happy life together. So it’s worth sitting down together for a serious discussion about money.
Lisa Duggan, a financial adviser with Epona Financial Guidance, says "often couples don’t like to talk money early in their relationship because it’s not considered very romantic". But she says it can be a big mistake not to talk about your finances before making a lifelong commitment.
"It can be awkward raising the topic of money, but it’s important to work through issues like how you’re going to manage money when you get married and whether you are going to have joint or separate accounts. There can be a stigma about keeping separate accounts, but having a joint account might not be the right thing for every couple," says Duggan.
Set financial goals
As well as day-to-day decisions about who pays for what, you need to talk about your longer-term financial goals. Not only because that conversation will give you clear direction, helping to avoid disagreements in the future, but because it will quickly reveal what your attitudes to money are.
Savers and spenders can live together; they just have to have strategies in place to balance out their differences. Compromise is the key. However if your financial outlooks are seemingly incompatible, then it’s something that needs to be addressed before you settle down.
Plan your future
Duggan says couples also need to address the issue of money not just at the start of their relationship, but at regular intervals throughout it.
"It’s about communicating on a regular basis about budget and cash flow. You also need to decide who’s going to be in charge of things like paying bills," she says. "But even if one person has day-to-day control of the household’s finances, both sides need to be fully informed about the partnership’s financial situation."
Given the importance of money in a relationship, seeing a financial adviser when you settle down can be enormously helpful. An adviser can help you set goals, resolve the questions you are grappling with, and raise other important issues you may not have thought of, such as insurance to take care of your partner if something were to happen to you.
When things don’t go to plan
Although the end of the partnership is usually the last thing on your mind when you’re getting married or moving in together, it’s worth having a discussion about what would happen financially if the relationship breaks up. The aim is to give both partners peace of mind, knowing that their interests and their financial contribution will be respected if things don’t go to plan.
Your financial health check
- Get organised. Make a list of all income, assets and debts, including credit cards and loans that you each bring into the marriage. Decide how you will own assets, whether jointly or individually.
- Make it official. Create a Will. Consider naming your partner as a beneficiary on investment accounts and submitting a death benefit nomination with your super fund.
- Put it together. From debts to investments, see if it makes sense to simplify by combining some accounts. Many couples like the convenience of having their retirement savings, cheque, and credit card accounts with one financial institution and on one statement.
- Plan together. Agree upfront about day-to-day spending, as well as big-ticket item purchases.
- Undo your debt. It’s common for one partner to come into a relationship with more debt, or to differ on how much debt is OK. To get started, list all income streams and expenses. Build a savings plan into your budget and set aside money for your emergency fund, at least three months worth of living expenses.
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