Let’s talk about money
When it comes to analysing the state of Australian relationships, you can forget the bedroom. The really revealing behaviour takes place behind closed bank accounts. Let’s talk about money..
It is no secret that money is often at the heart of divorce and family disputes. Money has certainly not bought love for Australia’s richest person, Gina Rinehart who is locked in a bitter court battle with her children for control of a $5 billion family trust.i
But you don’t have to be a billionaire to get embroiled in conflicts about money.
Research by Relationships Australia found that 37 per cent of women and 30 per cent of men rate financial woes as the main cause of divorce.ii The gender difference may be explained by the fact that women tend to manage the household finances and are first to feel the pressure when budgets are stretched.
Perhaps this helps explain why some couples are secretive about their money. In a recent study of married and de facto couples, 3 per cent of respondents admitted to having an account they kept secret from their partner as a ‘safety net’ in case something happened.iii
So how can couples, and families more broadly, bring money issues out of the shadows, reduce conflict and create financial trust in their relationships?
Discuss your money philosophy
In the early stages of a relationship couples may discuss attitudes towards children and their dreams for the future, but attitudes towards money are just as important if they are to live happily ever after.
For example, one partner may believe money is for enjoying while the other wants to budget and save for a home deposit. It is important to discuss philosophical differences to see if you are able to work together before it is too late.
Be open and honest
Trust is one of the most important ingredients in a successful relationships and money has a role to play in developing and maintaining trust.
Having separate bank accounts alongside a joint account for household bills can give couples a sense of control over their money and help avoid conflict. However, in order to maintain trust it is important to be open about all your personal finances and spending.
Agree on a budget
While budgeting may sound very last century, it is a powerful money management tool.
By sitting down with your partner to draw up a budget and track your progress you will not only identify savings but also start a conversation about your spending habits and money goals.
Be an equal partner
Many couples find it easiest to divide household roles between. But if one person takes charge of the big money issues it is important that their partner understands their joint financial position and is included in all decision-making.
If you find it difficult discussing more complex money matters with your partner, make a point of sitting down together with your financial and legal advisers so you both understand your financial position. And it goes without saying you should never sign a document you don’t understand.
Educate your children
The sooner you teach children good money habits the better. When they are young, help them open a bank account and set savings goals. When they are older, consider including them in family budget meetings and encourage them to get a part-time job to help pay for major purchases or a gap year trip.
By establishing good money relationships with your children early in life it should be easier to discuss difficult issues such as your estate plan and perhaps their inheritance. With a bit of luck, by setting a good example you may help them successfully negotiate their own financial journey.
i. ABC News, 24 June 2014, http://www.abc.net.au/news/2014-06-24/gina-rinehart-family-feud-over-billion-hancock-mining-trust/5544760
ii. ‘Financial stress main cause of divorce’ by Marissa Calligaros, Brisbanetimes, 12 Oct. 2008, http://www.brisbanetimes.com.au/news/queensland/financial-stress-main-cause-of-divorce-for-women/2008/10/14/1223749983243.html
iii. Smart Company, January 2014, http://www.smartcompany.com.au/finance/wealth-management/35083-secret-bank-accounts-see-people-stash-over-100-000-from-their-partner.html#
“Money isn’t the most important thing in life but it’s reasonably close to oxygen on the gotta have it scale” ~ Zig Ziglar