If you have been together for a while or are edging on making a big financial decision together, having the money talk could make a big difference to whether you go the distance. In fact, research shows 56.6% of people said discussing their finances strained their relationship. Having these conversations sooner rather than later can help minimise this strain and ensure you’re both on the same page financially before things heat up.
Here is a list of things worth discussing with your partner before you consider merging your money, moving in together, or buying any big-ticket items in both your names.
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1. Your views on cash management
Talk to your partner about your views around spending and saving. Kicking off with a light-hearted conversation, without judgement, can often be a good place to start for couples. You might want to share some examples of past experiences that may have influenced your current views and behaviours.
2. Sneaky spending habits if you have any
More than 1 in 3 partners have hidden secret purchases from their other half so with that in mind, now may be a good time to be forthcoming about common transactions you may not have been honest about in the past.i
3. Your income, expenses, assets and debts
Your financial situation is an important one to talk about even if you’re both earning a decent income (or have some assets behind you). Big expenses and potentially thousands of dollars of debt between you may impact any plans you have in the short and longer term.
4. Whether you’ve been paying your bills on time
If you’ve got any credit to your name, it’s more than likely a credit reporting agency out there has a credit report on you. This summarises how good you’ve been at paying your bills and making your repayments on time.
If you have a chequered history, this could affect your ability to borrow money. To check yours, consider requesting a copy from one of the reporting agencies.
5. What’s on your bucket list now and down the track
If one of you has plans to travel, buy property, get married or have children and the other doesn’t, this could raise issues or perhaps opportunities for further discussion and compromise. Sit down and map out your big dreams together. Download our goals workbook.
6. What a joint budget and savings plan might look like to you
Committing to something that you both think is fair could go a really long way here. If you’re not sure where to start, a good first step might be drawing up what money is coming in, what money is needed for the mandatory stuff and what may be leftover for your social life and savings. Try our budget planner.
7. Your job security and whether you see a change on the cards
If you’re on the verge of quitting your job or are aware of redundancies happening at work, this is probably worth flagging with your partner as well.
Speaking up so that the other isn’t caught off guard could make a big difference to the holiday, wedding or new-car plan that you’re working on as a team.
8. Your contingency plan if one of you isn’t earning an income
Despite everything that has happened over the past year, 1 in 5 people still don’t have enough money set aside to cover an emergency. So, it’s probably worth talking about whether either of you has an emergency stash of cash, personal insurance, or anything that may help you get by through a tough period.ii
9. How you’ll divide costs and or repayments
You may decide to tackle this 50/50 or proportionate to each other’s income. That is something you’ll want to nut out before you take on a big financial commitment together. Depending on your situation, there are many different options when it comes to splitting the bill. Learn more about managing different incomes.
10. The potential risks that may arise if you merge your money
If your partner defaults on repayment, you may be liable for the amount owing, even if your relationship ends. On top of that, ignorance isn’t an excuse, so if you sign papers you don’t understand, you’re no less liable for any loans or guarantees you may have signed off on.
With that in mind, it’s important both of you understand your responsibilities and consider whether you want to put anything you might agree to in writing.
Coupling up your finances is a big step, give us a call and we’ll help guide you through it.
Financial health is a vital part of any relationship. Make sure your finances leaves you feeling good by getting in touch with an adviser from Invest Blue today.
© AMP Life Limited.
First published January 2019
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