All you need is love (and financial compatibility)

February 28th 2024 | Categories: Financial Planning | | Tags: love | financial compatibility |

Talking about finances with your partner might not be the obvious way to their heart, but it is the way to your flourishing future.

As February rolls around, Valentine’s Day reminds us of the importance of love and connection in our lives. But amidst the romance, it’s important to remember that true love isn’t just about candlelit dinners and roses—it’s also about financial stability.  

Whether you’re embarking on the journey of moving in together, planning a wedding, or saving for your dream home, having your finances in order as a couple is among the foundations of building a life together.  

Here are some money mindsets to think about for the sake of the health and longevity of your relationship:  

Money issues in relationships

In a recent study, it was found that 55% of couples experience conflict and stress within their relationship at least once a year, with 19% experiencing negative impacts on their relationship every month. 

Before merging finances, it’s crucial to have open and honest conversations about your financial situation, where you are now and where you want to be. Do you have any debts that could be affecting your credit score?  Is it time to look at couples’ health insurance? This can include discussing debts, loans, and any other financial obligations that could affect your shared finances in the future.  

Establish trust, boundaries and balance

Mutual trust is essential in relationships, and that should extend to how your finances are managed. Both partners should feel comfortable and empowered to contribute to financial decisions. In the study above, 75% of respondents reported they have joint bank accounts, of which 68% said they share the mental load of financial decision-making. Some degree of financial independence is also healthy strike a balance that allows both partners to feel empowered while contributing to shared goals and expenses.  

Setting clear boundaries about how the joint account will be used ensures that each person’s needs and preferences are respected.  

Should you and your partner have a joint bank account?

There’s no one-size-fits-all approach to managing joint finances. Recent years have seen a break in tradition, with many couples opting to combine a portion of their income for shared expenses while maintaining separate accounts for personal spending. Different strokes, for different folks – it’s essential to explore different methods and find what works best for you and your partner.  

Couples that budget together, stay together

While it might not have warranted a scene in The Notebook, scheduling a budgeting date is an assured way to bring romance into your finances. Choose a time to sit down together to outline your income, expenses, and financial goals. Once established, this will help prioritize spending, plan for future expenses, and allocate funds towards savings. 

Not sure where to start? Consider adopting the 50-30-20 rule as a beginner’s guideline for budgeting. Allocate 50% of your income towards essential expenses such as mortgage/rent, bills and groceries, 30% for spending and date night fun, and 20% towards debt repayment or your future savings goals.  

You may also be interested in our articles:

• How to Talk to Ageing Parents about Generational Wealth
• 5 tips to help talk about generational wealth with adult children
• 7 Tips for Building Generational Wealth in Australia
• Who needs a testamentary trust?

Whether you and your partner are just starting or have spent years managing your money together – we’re here to help. Seeking the guidance of a financial adviser could mean the world of difference to what you can achieve over the rest of your lives together.  

What you need to knowThis information is provided by Invest Blue Pty Ltd. (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice regarding those matters and seek personal financial, tax and/or legal advice before acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.