James Trethewie, Financial Planner AFP®, and former Bachelorette contestant, is now a celebrity guest contributor to Money & Life.
When money can be such a big source of stress and conflict in relationships, it makes sense to get on the same page with finances. Our guest contributor, James Trethewie Financial Planner AFP® offers some important advice to help couples succeed in sharing and achieving their financial goals.
So you’re convinced that love conquers all and money matters can’t possibly come between you and your partner. Some recent stats about from Relationships Australia might make you think again. According to their survey of more than 2000 people from August 2015, more than 80% believe financial troubles are more likely to push couples apart than keep them together. And almost a third of these respondents think these significant relationship problems come from people having different priorities and expectations about money.
That’s why I’ve put together these ideas to get you and your partner talking about your financial goals and attitudes when the time is right for you. It could be the first of many conversations that will save your relationship from a lot of stress and squabbles.
1. When – talk before the wedding
In the early stages of a romance, money can sort of take care of itself. It’s not until you’re ready to make a bigger commitment to each other and your future that money starts to have an impact on your sense of security and harmony as a couple. So when the engagement party is over or when you open your first joint account, it’s definitely time to have a proper chat about all the things you’re looking forward to in your future life together and how you’re going to plan your finances around those goals.
It’s particularly important to talk money before planning what could be your first major goal – the wedding. The big day can get bigger Ben Hur, both in terms of budget and the stress it can cause. So having a practical chat about money and what you both expect can be a great way to prepare yourselves for a wonderful wedding that won’t break the bank.
2. Where – make a money meeting
It’s much easier to keep money conversations from getting awkward and heated when you can think, speak and listen objectively throughout. And while that isn’t easy to do – we can all have pretty strong feelings when it comes to money – you can set the scene for a more business-like approach to money conversations. Make time for your money meeting away from home and your usual haunts, in a quiet café perhaps where raising your voice won’t be an option!
Try to listen without judgement and understand that talking about money may make you and your partner feel vulnerable. Even though debt is common in Australia – more than three-quarters of households owe money – we can still feel ashamed of being in debt and struggling to live within our means. So while it’s good to stay objective during your money discussion, don’t leave your compassion at the door.
3. What – your vision for the future
What topics should you be looking to cover at this financial summit meeting? To start with, it can be a good idea to come clean about how you tend to deal with finances – your money mindset if you like. Are you a typically a spender or a saver? Have your money habits landed you in hot water in the past? Do you have any debts your partner isn’t already aware of?
With all this out in the open, you’re better prepared to start planning your future together in a realistic way. Thinking about where you’ll want to live and when and whether to have kids shouldn’t necessarily be limited by your finances. But by agreeing on what you both expect out of life in the next five, 10 or 20 years, you’ll become more aware of the money you’ll need to achieve your lifestyle goals.
4. How – control your cash flow
If the money summit goes well, you’ll be feeling pretty optimistic about your future as a couple. And this is exactly the right time to roll up your sleeves and get to work on taming your joint budget. I always advise clients – couples and individuals – to set up a number of accounts to make cash flow management easy and bring discipline to their spending and saving. It’s about having separate “buckets” for bills, short and long-term savings goals and one for guilt-free spending on things you both enjoy.
5. Keep on talking to live happily every after
When your money meeting becomes less about planning and optimism and more about rows and resentment, it may be time to get a third party involved. This is also a good idea if your cash flow management model starts to break down and you find yourself running out of money for bills or discretionary spending near the beginning of the month. In either case, it can help to have a referee listen, without taking sides, and offer sound advice to help you move forward with your finances and plans. This can be a professional money expert like myself, or a friend or relative who won’t be biased towards either one of you.
Every couple is different and the same couple can end up shifting their focus to new goals as their relationship evolves. But no matter what your plans might be, it’s always good to keep talking honestly about money and taking small steps towards building your future wealth and financial wellbeing.