It’s probably not the sexiest thing the two of you have on the to-do list but putting it off could see you butting heads.
Whether or not money issues got in the way of past relationships, you may be thinking, there’s no way you’re going to pull back on that long passionate kiss you might get after work today to drop the f bomb (I’m talking your ‘financial expectations’ going forward).
If you’re still in the honeymoon period, the idea might sound ludicrous, particularly if everything has been champagne and lingerie up until this point, or sport and beer (each to their own).
If you’re only a couple of months into the relationship, not wanting to have these conversations may make total sense (unless you’re about to wire some overseas lover you’ve never met your life savings).
If you have been together for a while though or are edging on making a big financial decision together, having the money talk could make a big difference to whether you go the distance.
Understandably, it may not be the easiest topic to broach, so feel free to use this article as a bit of a conversation starter, depending on what the two of you have planned going forward.
Talk about where you’re at and what you (really!) think
Here is a list of things worth discussing with your partner before you consider merging your money, moving in together, or buying any big-ticket items in both your names.
Your views on cash management
Talk to your partner about your views around spending and saving. Kicking off with a light-hearted conversation, without judgement, can often be a good place to start for couples. And, you might even want to share some examples of things in the past that may have influenced your current views and behaviours.
Sneaky spending habits if you have any
While around seven in 10 Aussies, who are in a relationship, say they don’t hide transactions from their other half, about three in 10 do, with fashion and beauty items topping the list, followed by gambling and money spent on junk food1.
With that in mind, if there are a couple of common transactions you make that you know you haven’t always been forthcoming about (how many times do you really go to Maccas rather than pack your lunch?), now may be a good time to get that out in the open.
Your income, expenses, assets and debts
Your financial situation is an important one to talk about because even if you’re both earning a decent income (and potentially have some assets behind you), big expenses and potentially thousands of dollars of debt between you may impact any plans you have in the short and longer term.
To throw a few figures at you for context, 24% of generation X Aussies, 22% of generation Y Aussies and 12% of Baby Boomer Aussies have more than $5,000 worth of credit card debt alone2.
Whether you’ve been paying your bills on time
If you’ve got a credit card, personal loan, mobile phone plan or utility account, there’s more than likely a credit reporting agency out there that has a file with your name on it. This file, also known as a credit report, will summarise how good you’ve been at paying your bills and making your repayments on time.
If you have a chequered history, your report mightn’t read particularly well, and this could affect your ability to borrow money. If you’re unsure how your report reads, consider requesting a copy from one of the reporting agencies (Equifax, Experian, illion or the Tasmanian Collection Service).
What’s on your bucket list now and down the track
If one of you has plans to travel, buy property, get married or have children and the other doesn’t, this could raise issues or perhaps opportunities for further discussion and compromise.
Depending on how important these things are to you or your partner, it may be worth nutting this out early on, or if you don’t come to a solution straight away, knowing that it’s something you’d like to raise again at a later date.
What a joint budget and savings plan might look like to you
Committing to something that you both think is fair could go a really long way here. If you’re not sure where to start, a good first step might be drawing up what money is coming in, what money is needed for the mandatory stuff and what may be left over for your social life and savings.
While not everything has to be shared, if one person’s saving more and the other’s spending more, arguments may arise, so try to come to an agreement that works for both of you.
Your job security and whether you see a change on the cards
If you’re on the verge of quitting your job or are aware of redundancies happening at work, this is probably worth flagging with your partner as well.
Speaking up so the other isn’t caught off guard could make a big difference to the holiday, wedding or new-car plan that you’re working on as a team.
Your contingency plan if one of you isn’t earning an income
One in five Australians doesn’t have enough money set aside to cover a $500 emergency3, so it’s probably worth talking about whether either of you have an emergency stash of cash, personal insurance, or anything that may help you get by through a tough period.
If you don’t have a plan b, now might be the time to talk about how you might be able to create one together. Plus, it may reduce the need to rely on high-interest borrowing options, such as credit cards or payday loans, which can often be an expensive way to borrow and create unwanted debt.
How you’ll divide costs and or repayments
You may decide to tackle this 50/50 or proportionate to each other’s income. That is something you’ll want to nut out before you take on a big financial commitment together. And, you may also want to take into consideration anything additional you might be bringing to the table, like money or assets.
The potential risks that may arise if you merge your money
If your partner defaults on a repayment, you may be liable for the amount owing, even if your relationship ends. On top of that, ignorance isn’t an excuse, so if you sign papers you don’t understand, you’re no less liable for any loans or guarantees you may have signed off on.
With that in mind, it’s important both of you understand your responsibilities and consider whether you want to put anything you might agree to in writing.
Looking for a bit more info?
Depending on what you and your partner see yourselves doing in the future, check out the AMP Insights hub for more tips and insights.
If you want to stay on track financially, you might also be interested in checking out the AMP Bett3r Account as it enables you to track bills, set up savings goals and know what’s safe to spend.
1 Finder - Out of sight, out of mind: One in three Aussies spend secretly
2 Finder – State of the Credit Card Market Report page 21
3 Finder How a $500 emergency could spell financial ruin for millions of cash-strapped Aussies
3 biggest household expenses05 November 2019 | Manage my money We check out the three largest contributors to household spending in Australia and where people would source cash if living expenses increased. Find out more with AMP. Read more
5 life insurance questions you’ve always wanted to ask24 April 2019 | Manage my money Find out what impact your weight, age and smoking status may have on your ability to buy life insurance. This list from AMP explains the impact of these factors. Read more
Tips for when you land your first full-time job29 January 2019 | Manage my money Congratulations on scoring your first full-time job. To get you up to speed with some of the important money-related stuff, here are some tips from AMP. Read more
This information is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.
AMP Bett3r Account is issued by AMP Bank Limited ABN 15 081 596 009, AFSL 234517. Consider the terms and conditions available on request by calling 13 30 30 or at amp.com.au/bett3r and whether this product is appropriate for you. Fees and charges apply.
Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.