Women and money in relationships

What to get right when it comes to money matters

Seldom do we think about money matters the moment we fall head over heels in love and into a relationship.

But in 2019, the rise of dual income households and the quest for economic equality make it increasingly important not only to talk about money in relationships, but to get your conversation right from the get-go.

Impact of financial stress on relationships

Financial stress is one of the biggest killers of relationships.

AMP’s Financial Wellness research report found financial stress costs Australian businesses $31.1 billion in lost revenue and impacts two in five Australian workers during their careers¹.

To reduce this stress, many financial and relationship experts agree that open and honest communication are key to minimising arguments and potentially avoiding them altogether.

Here are five possible things to think about before you next find yourself talking about money.

• Talk openly about your individual financial positions.
• Understand each other’s values, attitudes and financial goals, particularly whether they are aligned.
• Identify how financially literate you both are, and areas where further education may be needed.
• Talk about the management of joint finances. Who will manage this, and ensure full disclosure.
• Talk about kids. Do you see them in your future? Do you know the financial impact and how you might want to manage this?

Of course, achieving economic equality and financial independence in a relationship, particularly for women, is about more than just having a money talk. It’s also about the actions you take when it comes to relationship finances.

How to manage finances in a relationship

Two common action points are around bank accounts and financial control.

It’s fairly typical for one partner in a relationship to take financial control, such as paying bills, managing cashflow and assets, but there should also be clear communication and complete transparency for the other person in the relationship.

It’s also okay for both partners to have individual or joint accounts, or a combination of both. The key here is about ensuring there are no secrets.

The same also applies for credit cards and asset ownership. No secrets.

Ultimately, the more transparent the relationship finances, the less likely it is that trust could be eroded or financial abuse could occur.

Global studies, including the 2018 HILDA Survey, tell us that women tend to be less financially literate than men². And other research also suggests that women are more likely to hand over financial responsibility to a partner if they earn more, according to creditloan.com.

Both are facts that, in addition to women having shorter working lives but longer life expectancy, put them at greater risk of poverty and financial abuse.

What are the advantages of pre-nuptial agreements?

Pre-nuptial agreements are also an area of relationships that’s worth talking about, particularly for high net worth, previously married couples with children and older financially established couples.

Pre-nuptial agreements in Australia are a form of Binding Financial Agreement under the Family Law Act.

But their effectiveness has been brought into question by the legal profession and the Family Court over the last decade, as they are not always binding when a couple separates.

So getting a pre-nuptial agreement prepared can be a large expense, particularly if it’s not guaranteed to be binding. However, there are certain steps that need to be taken that will help the pre-nuptial agreement to remain binding, and advice is required from a solicitor.

Financial deal breakers for relationships

So if you are thinking seriously about the financial dynamics in your relationship and are gearing up for your next money talk, here is a handy list of potential deal breakers to be wary of.

• Handing over financial control in blind faith. It can help to establish clear communication and complete transparency about finances for both people in a relationship.
• Contracting debt from your partner. Women tend to contract this more so than men. It either arises because debt it is not disclosed at the start of the relationship, or because one person has taken control of the finances and does not disclose what they are up to.
• Giving up on your own financial dreams. If your spouse doesn’t share your financial goals, then it could be a good idea to create a separate account to give yourself the best chance of achieving your dreams.
• Signing documents without reading them first. Don’t unknowingly get yourself into debt or sign up to anything without knowing what you are getting into.
• Ignoring your rights. You are entitled to independent advice, so don’t bury your head in the sand. Get educated and protect your financial wellbeing.

Bianca Hartge-Hazelman is a columnist on women's money matters and is the founding publisher of Financy and the Financy Women's Index. This article represents the views of the author only and does not necessarily reflect the views of AMP.

^{1 AMP, Financial wellness in the Australian workplace, AMP, pg. 9
2 Melbourne Institute Applied Economic & Social Research, The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 16, pg. 117}