April 27, 2021
Money is probably the last topic you want to talk about with your significant other. It can be a sensitive or even embarrassing subject that you’d prefer to avoid. But if you’re married or living with your partner, it’s important to discuss finances openly and regularly.
Money and relationships go hand in hand, and if it’s poorly managed, it can lead to conflict for couples. Here are five common mistakes that couples make when it comes to money and how to fix them.
Not setting time for money dates
We make time for important things like seeing the dentist or the doctor. The same rule should apply to talking about finances.
Set a time that works for both of you and do it regularly, weekly or fortnightly is a good place to start. Be intentional about what you will chat about – it could be budgeting one week and savings goals the next.
Put in place some ground rules so that your money date is beneficial to you and your partner. Agree to be honest, to take shared responsibility for your finances, and to have open discussions.
2. Being in the dark about each other’s finances
You and your partner need to be open about everything related to your finances: your earnings, assets, expenses and debts.
It won’t be comfortable revealing things like a low credit score or escalating debts, but it will minimise any surprises. If debt is an issue, rather than hiding it, plan how to address it together. This will avoid any awkward moments when it comes to applying for a joint loan.
You should also find out how you both like to spend and save money. With big-ticket items, discuss if you want to run them past each other.
3. Not having financial goals
You and your partner may want different things in life, which will influence how you spend and save money.
Start by talking about your long-term financial goals. They could be buying a new home, retirement, starting a family, or starting a business. List all these goals and rank them in order of priority. These will provide you with a roadmap for your finances.
From there, you can come up with short-term goals that will help you achieve your long-term aspirations. Common goals include:
- paying off debt to free up cash
- cutting down on your living expenses
- establishing an emergency fund to cover unexpected costs.
Not having a budget
A budget helps you plan and track how you spend your money, and it’ll help minimise arguments over your finances.
It’s a collaborative effort so work on it together. When you are creating a budget, go over your income and expenses. Talk about how much will go towards:
- savings
- discretionary spending such as hobbies and leisure
- financial goals such as holidays or a home deposit.
If there is any leftover money, you can agree that it can be spent freely.
Review your budget regularly and make tweaks so that it is working for both of you. Importantly, be flexible so that you and your partner feel a sense of independence with your finances.
Not allowing for autonomy over money
It’s not a good idea to hide your spending from your partner, but it’s also not healthy to restrict and scrutinise each other’s spending. This is a common issue when couples have a joint account.
Allow yourself and your partner to have some money that you can spend as you choose, with no strings attached. For example, you could budget for a weekly or monthly allowance that can be used however you want.
It’s never too late to start having a discussion about money. The important thing is to start the conversation today.
You may consider seeing a financial adviser for practical advice on managing your finances tailored to your situation. Our Bayside FinChoice advisers offer a free initial consultation where you can find out how they can help you and whether it’s right for you and your partner. Call our Bayside team to chat on 9589 7277 or Speak to us button to request a callback.
