Leaving the single life behind to become a twosome is an exciting and romantic time. The last thing on your mind is how to manage your joint finances. Yet relationship success and financial success as a couple have a lot in common. Both rely on good communication and negotiation.
Money may not be romantic, but it’s important to get into the habit of talking openly about joint finances from the start. It will give you both insight into each other’s personal and financial goals and a better chance of marrying them into a joint financial plan.
While both partners need to be involved in financial decision-making, the way you divide financial tasks and responsibilities is a personal matter. One of you may be more confident or interested in budgeting and investing while the other prefers to concentrate on other household tasks. But even if one person assumes more of the day-to-day financial management, both partners need to understand what money is coming in and how it is spent.
Whether you are already living together or planning to, here are some steps to get the conversation started.
- List your financial priorities.
This will give you an indication of areas where you may need to compromise. If one of you is focused on saving for a house deposit but the other wants to travel, you may need to negotiate a financial strategy to help you achieve those goals. Small compromises on both sides may be necessary, but the satisfaction that comes from honouring each other’s dreams and priorities will be worth it.
- Discuss your personal goals.
This might include whether you want children and where you want to send them to school. If there are children from a previous marriage, who will provide for them? While children bring great joy into a relationship, they are a major financial commitment which can cause tensions if not planned and budgeted for early on.
- Sort out your banking.
Will you have joint bank accounts and credit cards, and how will bills be paid? Now that two-income families are more often the norm, it’s more important than ever to discuss what’s mine, yours and ours. There’s no right or wrong approach as long as you are both in agreement. Some couples have joint accounts for everything, some prefer to keep all their money separate, while others take a middle path and have joint accounts for household spending and separate accounts for personal spending.
- Revise your insurance needs.
Now that you are responsible for a partner and perhaps children, you need to protect them. How would you cope with the mortgage or medical bills if one of you were to become ill or die? It’s not a happy thought, but having appropriate life insurances, health cover and home insurance can give you peace of mind and ease the financial pressure in difficult times.
- Consider a pre-nuptial agreement.
If one partner is expecting an inheritance, or brings more financial assets to the relationship, discuss how it will be used and whether it will be kept in one name or shared. Pre-nuptial agreements don’t sound very romantic but they do make sense, particularly where one partner has considerably more assets before marriage. Such agreements have formal legal standing in Australia but it is important that both partners seek legal advice as they can be set aside by the courts if found to be unjust or unreasonable.
Life is an adventure best shared. One way to ensure the journey is a happy one is to share your personal and financial goals early in your relationship and make open and honest communication a lifelong habit.