There are many tough conversations that you have in a relationship.
The first “I love you”.
Talking about kids.
Moving in together.
These discussions all come with their fair weight of nerves since they imply commitment – and talking about your finances is no different.
Money comes and money goes – as long as you are both doing your best to save, that’s all you need, right?
Day to day, yes.
But sometimes, money and relationships don’t mix.
It is important to have a discussion about your financial expectations and goals with your partner. This will help you to make the most of your money and avoid conflict down the track.
Below are some factors to consider when discussing money.
Create a spending limit
There are few shocks that affect us more than a surprise deficit in our bank account. Spending without your partner’s approval is a sure way to create conflict in money and relationships – even if the purchase was necessary. To avoid this, create a spending threshold with your partner, and make it a rule that any purchase greater than this amount must be agreed on. This will avoid feelings of betrayal while still giving you autonomy with your money.
There are countless budgeting tools that can help you manage money and relationships. Pocketbook and this tool by the Australian Securities and Investment Commission (ASIC) are two of our favourites.
Determine your financial priorities
What do you consider most important in your life? What do you want to devote money towards?
Do you want your kids to attend a public or private school? Do you value a certain lifestyle? What about vacations?
Speak to your partner about your financial priorities, and agree on goals to work toward together. Once you have a specific savings goal in mind you will find money and relationships infinitely easier to navigate.
Discuss retirement
Although retirement may be decades off, you can never start planning too soon – especially given that retirement is increasingly understood as a time to travel and have fun!
Are you in the group of people who, for better or for worse, will stop working as soon as you hit retirement age? Or do you envision yourself working longer to save a bit more money? However you see your future, make your retirement vision clear with your partner.
Your discussion should also take into account how you will achieve your dreams. Do you want to invest a portion of your earnings? Or play it safe with your super? Being strategic early can pay off big time in the long run. Make money and relationships work for you.
Consider credit rating
While most couples will combine their finances, consider keeping at least one credit card that is solely in your name. This isn’t to use on secret purchases (if only!). Instead, use it to ensure that you maintain a separate credit history.
In the event that your relationship dissolves or one of you passes away, you will need your own credit rating to apply for credit. Don’t rely on money and relationships for your credit rating. Be responsible and maintain your own credit history.
Be honest about debt
You feel embarrassed by debt. That’s no excuse to hide it from your partner. Trying to pay debt off secretly may feel noble, but it is also inefficient – and untruthful. If your partner discovers that you have been hiding financial problems from them it could also create some trust issues that are difficult to overcome.
Make sure you both know how to access your accounts
In many relationships, couples devise an effective system where one partner will take more responsibility for paying bills and keeping track of your financial status – and that’s great!
Just ensure that if one person takes control of your finances, the other still understands how to access and manage your money. You don’t want worry about passwords or proving your identity to the bank in an emergency!
Communicate regularly
When it comes to money and relationships, communication is the key. Schedule a monthly meeting with your partner to rehash your goals, plan for any upcoming expenses and review your savings targets.
By being open about your money you will avoid future financial feuds and make money and relationships work for you.
