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.
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.
About three in 10 Aussies hide transactions 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
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.
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.
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.
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 left over for your social life and savings.
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.
One in five Australians doesn’t have enough money set aside to cover a $500 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
If you don’t have a plan b, now might be the time to talk about how you might be able to create one together.
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.
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
What you need to know
This 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 with regards to those matters and seek personal financial, tax and/or legal advice prior to 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 relations to products and services provided to you.
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