Money is one of the biggest sources of frustration in most relationships. The main reason is that a lot of people have trouble talking about money. Talking openly and honestly about money can reduce stress in your relationship, and can lead to greater savings when you and your relations are on the same financial page.
Why is it that we have such difficulty talking about finances? Some of us are embarrassed about our spending habits, the amount of debt we have, or the amount of income we earn. Others take the approach that money and finances is something that people don’t talk about — even with the closest of friends and family. The most important thing in any relationship is honesty, and this must hold true with your finances as well. You must let your financial partner know if you have credit card debt, a poor credit history, a bankruptcy, or struggle with the basics of money management.
Here are some tips on managing finances with your partner.
Talk to your partner about money
Talking to your partner about money is important, whether you have similar or different spending and saving styles.
Here are four crucial issues to discuss:
- Relationship goals: Work out your relationship goals with your partner. Consider what goals you share: is marriage, buying a home or having a baby on the horizon?
- Current financial situation: Take stock of your income and expenses, assets and debts and your credit rating. Start thinking about ways you may be able to reduce spending so you can save for your goals, and how you can reduce any debts faster.
- Attitudes to spending and saving: Are you a spender or saver? What about your partner? Your background and experiences will influence how you think about money. Understanding how your partner approaches financial matters will make it easier to create a money plan that suits you both. Try to find common ground so that you are working together.
- The financial controller: Who will handle the finances? Will one person look after household expenses, mortgage and savings, or will you share the responsibility? Make sure you’re both happy with the decision.
Take actions together
If you’re serious about sharing your finances, here are some things to consider:
Use both names
- Put both of your names on services like electricity and gas. This will make you equally responsible.
- Putting joint assets and liabilities, like your home and the corresponding loan, in both names means you will both have an ownership interest in the asset and both be responsible for the debt.
- Think twice before putting your name on a loan that will only benefit your partner. See loans involving family & friends and joint accounts for more details.
- If you have private health insurance, it could be cheaper to share a couple’s plan than pay for two singles plans.
- Insurers will often give family discounts on multiple policies, such as for car insurance, so shop around to see if you can get a better deal by using the same insurer for several policies.
Plan for a shared future
- Get organized by making a list of all your accounts, loans, investments and insurance. Keep all your financial information in one place so you both know where it is.
- Work together on a household budget. This will help both of you see how much money you can spend and how much you can save or invest in your shared goals.
- If you are married or in a de facto relationship you may be able to split off some of your super contributions to your spouse. This may be beneficial for your retirement plans. If you have a non-working spouse you may also be able to claim a tax offset for after tax spouse contributions.
- Make a will and keep it up to date. See our wills and powers of attorney page for more information.
If you earn less income than your partner, you may feel you don’t have a right to make decisions about where the money goes. Talk to your partner about how you feel. You should work as a partnership, including when it comes to money.
Know the facts about sharing money
Don’t be blinded by love – be aware of how much money is coming in and going out. Here are some facts you may not be aware of:
- A joint loan doesn’t mean you’re only liable for half the debt. If your partner defaults, you may be liable for the whole amount, including fees, interest and charges, even if your relationship ends.
- If a utility service such as electricity or gas is only in your name, then it’s your sole responsibility to pay the bills.
- Think carefully before you guarantee a loan for your partner or family members. If things don’t go to plan and the borrower can’t repay the money, you could be asked to repay any loan you’ve guaranteed, including fees, interest and charges. For example, if the guarantee is secured against your home you could risk losing the home.
- Ignorance is not a defense. Signing papers, you know nothing about, just because your partner told you to, does not make you any less liable for any loans or guarantees you may have agreed to.
Share bill paying duties: One of the issues that causes problems is when one member of the relationship handles 99% of the household bills. That person may get frustrated with due dates, limited funds, lack of foresight, bad planning, etc. When it comes to the fixed, monthly bills like the mortgage, utilities, and credit card statements, both people should always know the details about those important obligations.
Set goals together: Most experts agree that couples should set goals. Consider making separate “wish lists” and then, together, rank the items and work toward those that you both feel are most important. One goal that every couple should have is to be able to retire comfortably. That goal can only be achieved if both the spender and the saver in the relationship come to an agreement about the importance of that issue.
Celebrate success: When you can achieve something, it’s fine to feel good about that! Maybe you paid off a credit card, or built up a savings account, or purchased a new appliance with cash. Celebrate together when you reach your goal. That will help keep you both motivated.
Shared credit cards
If you are thinking about sharing a credit card with your partner, make sure you understand the different types of accounts available.
Joint credit cards
A joint credit card is held in both names. The bank will consider the incomes and credit histories of you and your partner when you apply for a joint credit card, and you will be equally liable for repaying what’s owed on the card. A joint credit card will be suitable for you if you both share the same financial goals and trust each other to do the right thing. However, if your partner goes on a spending spree without your knowledge, you are both responsible for repaying the debt. If you can’t repay the debt, it will affect your credit rating as well as your partner’s.
Primary and secondary credit cards
If you already have a credit card in your name, you can arrange for your partner to have an additional card on your account. This can be useful if you have a better credit history or higher income than your partner. If your card is linked to a reward scheme, points earned on the primary and secondary cards will usually be credited to your account. However, as the primary cardholder, you will be solely liable for any debt on the account.
Joint bank accounts
Opening a joint bank account is a big step in your relationship. Visit joint accounts to help understand the risks and benefits, and how to close a joint bank account, so you can work out whether it is right for you.
If you want to maintain some financial independence, think about keeping your own bank transaction account and credit card in addition to any joint accounts.
If you need help with debt or money problems, think about meeting our financial adviser. The Department of Human Services offers a free Financial Information Service (FIS) that can tell you if you are entitled to any benefits, especially if your circumstances have changed.
Consider relationship counseling
If you have broader relationship conflicts related to money, a relationship counselor may be able to help. Read more about managing relationships on the Australian Government Family Relationships website, or visit the community-based support service Relationships Australia. There is also useful information about your legal rights for dividing property on the Victorian Legal Aid website.
Know the signs of financial abuse
Some people find themselves being pressured by partners, family or friends to hand over control of their money or property. This may be financial abuse.
Keeping a sense of your financial self is key to a strong relationship. Don’t be afraid or embarrassed to speak to your partner about money issues, and work on sorting them out together.
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