Romance might be in the air this month, but in a world of growing credit card debt, loans and big mortgages, money problems for couples can be a relationship deal breaker.
A survey by Relationships Australia highlighted that financial stress was one of the key negative influences on a couple’s relationship, with disagreements about money a major cause of divorce.
About 85 per cent of respondents, mostly women, indicated that financial problems were likely to push couples apart, which is why openness, honesty and planning together can play a big part in a relationship.
For the long-term good of your relationship here’s five things you can do to start working on your communication about money this Valentine’s Day:
1. Talk money before marriage or moving in
Take the time to sit down and discuss openly your views about money, and as early as possible in the relationship. Be open about your financial commitments and debts, whether or not you want to merge your money into joint accounts or keep it separate.
2. Think about your goals together
It’s a good idea to put down in writing your mutual goals for the next year, the next five years and the long term so you’re both on the same wavelength – this includes travel, marriage, property and kids which all relate to your finances. This is extremely beneficial before seeking advice from a financial adviser too. What’s important to remember is that it’s OK to have shared financial goals but still some personal freedom with your money.
3. Take off those rose-coloured glasses
If you want a relationship to last, it’s time to be brutally honest with yourself about how well you manage your money. There are some people who continue to cover up their real income, assets, expenses and debts to their partner – sometimes after years of marriage – which can be disastrous. It might seem like tough love, but it’s important for the sake of your relationship to review all your debts and work on strategies to start paying it down together.
4. Avoid spending behind your partner’s back
I’m sure we’ve all been guilty of telling our other half a tall tale or two in the past to keep our spending a secret. In fact, Australians are forking out over $11 billion a year on sneaky purchases behind their partner’s back. According to research, one in five Australians are spending money in secret, with clothing topping the list, followed by gambling, junk food and cigarettes.
However, with average household debt in Australia today at around $245,000, if considerable money is going unaccounted for in your relationship then it may be time to come clean and devise a plan that works for both of you.
5. Create a budget and have a savings plan
Once you both have a grasp of exactly what income is coming in and what money is going out in the partnership, you can effectively create a budget together and start saving. There are online calculators that can help you and your partner set up a budget and start saving. Also consider a smart bank account which can split your income into savings, spending and funds for all bill payments to take the hard work out of managing your money and help you stay on top of your finances.
Like all things in a relationship, when it comes to money honesty is the best policy. Being able to rationally and calmly discuss money – rather than argue about it, is the key to a healthy relationship.
Jenny Cattach of Cattach & Cattach is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.