Jul 01, 2021
*WARNING: Touchy Subject – Proceed with CAUTION!
In the past I haven’t been very good at sharing. I was the kid who must have EXACTLY THE SAME amount of cordial in my cup the other kid has. If it was MY doll, then you DID NOT touch it. As I’ve grown up I like to think I got better, but when it comes to money, and especially as a couple, sharing can be tough! We want to be practical, but the reality is money and emotions go hand-in-hand, so we really should be having some honest conversations about it with the person whose hand we are holding.
Now, you can’t very well ask someone about their bank balance, overdue debts, addictions, spending habits or life plans on the first date, right? (Let me be clear – the answer is NO, I’ve learned this the hard way 😢)
On the other hand, it’s a bit late to figure it all out after you have signed the contract for a mortgage or got that ring on your finger. Sometimes people never really talk about it, and just hope it works out for the best – I personally need a little bit more assurance and I think you deserve some too!
Look, I get it - money is a touchy subject at the best of times. This article is designed to pose some questions and start some healthy dialogue around money. There might be some obvious stuff, but you’ll more than likely find a few things you hadn’t thought of before and how they relate to your (current or budding) relationship.
If we look at love like an investment, maybe your most important one, we need to take measured risks and make informed decisions in the hope it pays off in dividends.
A few key reasons I care about you having these money conversations (not one… many):
- You could have more freedom and power together
- If you are on a life path together, then maybe it could be better if you share
- Also, not everything works out so you should be protected
- Be on the same page about what your money is going to be allocated to
- Both be responsible for the position of the family (even if only one of you works)
- Stay informed (even if it is not you earning the income)
- Avoid resentment (if you earn but your partner does not)
- Avoid heaps of fights about over spending, or being a “tight-ass”
- Feeling free
There is a lot of tough stuff that can be avoided by good money management.
A lot of sustainability and wealth can come from it too.
In my opinion, you can see red flags (I never seem to see red flags in romance, only pretty pink scarves) about people’s relationships with money from quite early on. So, no need to jump straight into the heavy chats if you are just dating.
Things you can see early on:
- What do they spend their money on? This can indicate what they value and prioritise.
- Do they always seem to not have enough money? Maybe this reveals their money mindset or their habits.
- Or do they seem to have an infinite abundance of money?
- Who pays for the dates?
- What do they expect you to pay for?
- How often do they “treat themselves”?
- Do they borrow money from friends?
- Do they have a credit card?
- Do they lend money to other people?
- Do they live out of home, or with parents?
- Do they own their own home?
- Do they gamble (ever)?
- Are they comfortable and open with you about money? Or does it all feel a bit secretive?
- What are their parents like with money?
- Have they ever talked about a budget?
- Do they track what they spend at all?
- Do they talk about saving for anything (house, car, holiday etc)?
None of these things is good or bad in and of itself. These can be indicators though of this person’s relationship with money.
Now, ask the same questions but about yourself!
It is important to be aware of what you bring to the table. For example, I love to see people having budgets and tracking their expenditure… but I have seen couples who look over the grocery bill and bicker about who is eating the avocados and therefore who owes an extra $3. That is too far, even for me.
I love dating, food, wine, and adventures. So, I like to tie the money conversations (which most people don’t like) with more positive things.
Once things start getting serious, you need to get serious about the money too. Maybe it starts slowly, or maybe you are an ‘all cards on the table’ kind of person. Perhaps you could blame me, and suggest you both answer a questionnaire together about money - this blog might prompt the discussions if you like.
Here is my list of questions you should have at least talked about before you move in/get married/become de facto.
- How does money make you feel?
- What is the most money you have ever had?
- What is the least amount of money you have ever had?
- How would you describe your parents' management of money?
- Did you ever get pocket money? Did this have to be spent or allocated in a particular way?
- How would you describe your spending habits?
- How would you describe your saving habits?
- Do you have a budget? Ever done one?
- How do you feel about budgets or tracking money?
- Ever used a spending app?
- Do you have a savings account/s?
- What are you saving for? What are some of the big purchases you would like to make?
- What % of your after tax income do you put into savings?
- Do you have a fund for a rainy day?
- How much ‘cash’ do you think you should have for a buffer account?
- What sum of money would make you feel comfortable?
Bank Accounts and Money Management
- Do you have multiple bank accounts? Or just one?
- Who has access to these accounts?
- Any credit cards?
- Any term deposit accounts?
- What is the flow of money (i.e. all comes into account A, then x% to B and then x% to C)?
- Generally speaking, how do you feel about debt?
- Have you ever been in debt? If yes, what for? Has it been repaid?
- Do you have any debt right now? If yes, list the loans/credit cards.
- How much do you currently owe?
- What is the interest like on these?
- Any nasty debts? (they might come and break your knee caps kind of debts)
- What is the plan for repaying these? (amount each week/month, over how many years etc.)
- Do you have any recurring payments you have to make? (like child support)
- Does anyone owe you money?
- What is the plan for recovering this?
- Do you often lend money to people? Who to?
- What is the most amount of money you would lend to someone?
- Do you borrow from friends and family? (even little amounts)
- Do you always pay people back? How fast are you at this?
- How much money do you make each year? (eeeeeek this is a tough one that most people hate talking about)
- Before tax, after tax
- Do you/your employer actually pay money into your super fund?
- Do you make extra contributions?
- How much would you like to make?
- What if you don’t make this much, what happens?
- Do you have a budget?
- How often do you update it?
- Describe how you allocate your money to different things...
- What are your thoughts on ethical spending or investing?
Property and Assets
- Do you own any property? (land/house)
- Any cars or other big assets?
- Do you have a mortgage? Or is it all repaid?
- Would you like to own more/own a first home? Let’s talk about this - price, location, timeline, budget/plan to getting there
- What are your thoughts on the share market?
- How would you describe your risk appetite?
- How would you feel about losing $2k, $20k, $200k etc.?
- How much is in your superfund?
- How is your superfund invested?
- Do you love tax? (silly question, of course you do)
- Do you have an accountant or do you lodge your tax yourself?
- Are you up to date with your tax?
- Do you owe the ATO anything? If yes, refer to the debt questions above.
- Do you have a Will or Estate plan? (if yes, talk me through it and if no, let’s chat about that)
- Do you run any businesses? If yes, what are they? (names, nature of business, what type of entity)
- Do you have any Trusts?
- Are you a Partner in any Partnerships?
- Are you the Director of any Companies?
- Are you involved in any other businesses?
- How do you see us handling our finances? (keep it broad)
- Do you have any big goals (with a price attached)?
- Do you want to share everything or keep it mostly separate?
- What would make you feel most secure and free?
- What are your highest priorities for your money?
- What about if we have kids? What examples do we want to set for them and how will we teach them about money?
- How can I support you, and you support me, as our lives change? (sickness, time off, travel, job changes, family etc.)
- How do you like to be rewarded? What can we do (and save for) that would help us to celebrate?
So many questions - apart from one: “why am I still single?” 🤷
Again, there is no right or wrong. It is important to create a safe space for each other when discussing this money stuff. It can be hard, but try to remove judgement. Listen, be curious, ask for further information, pose ideas, discuss the best and worst case scenarios, be honest, and check in with each other often.
PART TWO - Family Finances
There are so many options when it comes to how to manage your finances as a family (couple). The approach you feel most comfortable with is likely going to depend on you and your partner - some people like to have everything in the one bucket, while others keep money completely separate. There are many different approaches, but most importantly, you need to find what works for both you and your partner.
I am a fan of…
- Full transparency of assets, debts, income and expenses, up front and ongoing - even if you are not the main earner or the most financially literate person in the family you should still know what is going on.
- A decent number of bank accounts that help keep money aside for specific purposes
- One joint account you can both see and control - you get paid into here
- One joint account for boring bills and expenses
- Maybe one joint account for bigger fun stuff like an overseas holiday
- Separate accounts that the other person doesn’t necessarily see or control.
- Everyday - petrol, coffees, takeaway lunches etc.
- Splurge - clothes, nails, nights out
- Smile - short term savings for bigger fun stuff
- Regular ‘money dates’ where you check in with each other and look at the actual bank balances and activity for the past month or so. This is not a time for judgement - we all slip up - it’s a time to reassess, recalculate and re-prioritise. It is also a time to learn, encourage, and be rewarded when we achieve whatever we set out to do.
- An annual discussion and agreement on how funds will be allocated - savings, bills, and on what fun stuff (some call this a ‘budget’).
- Figure out your rough combined incomes. Figure out your estimated expenses in all key areas, on an annual basis.
- Then backward calculate to figure out how much that would be per week.
- Lastly, consider which account you might pay that from e.g. groceries from everyday, and water bills from the boring/joint account. Add up the total for that account for the week and set that up as an auto transfer from the big joint account to each of the others.
- Review the ‘budget’ either every quarter, or whenever there is a change in income (or major expenses) and update auto transfers from the main joint account.
Savings (or offset maybe)
I am keen to learn about what works for you and why. If you have a particular set up that you are loving then email me today!