What to do if you aren’t a financially compatible couple?

According to the Australian Bureau of Statistics (ABS), in 2019 there were 113,815 marriages. Sadly in the same year there were 2,162 divorces, with financial issues cited as one of the major reasons for marriage breakdown.

For couples deciding to move in together, the idea of buying a home and building a future can be very exciting, and prompt a lot of discussion. Conversations around shared finances and where one another stands on money – in particular, financial goals and obligations – don’t seem to generate the same enthusiasm. Nevertheless, these are the discussions that need to take place as they can impact everything from where you live, to children, schools and lifestyle.

For example, what if you tended to use credit to buy the things you wanted, while your partner was debt-averse and preferred to save up? How would conversations around buying household items go? Additionally, existing debt has the potential to cause considerable problems in relationships; nobody likes financial surprises.

What happened to Chris and Noel?

When Chris a restauranteur, and Noel a marketing manager, decided to buy a home together, they were so compatible that they agreed on location, style and even budget without the need for any serious discussion. Imagine their surprise when their joint application for a mortgage was declined.

Turns out, that several years ago Chris had taken a business loan to buy the restaurant. The business had undergone some teething problems and as a result Chris’s credit score had been impacted. Noel’s income alone was not sufficient to cover the mortgage so the couple was unable to buy their dream home.

What can be done?

The resulting disappointment and arguments could have been avoided had they discussed their debts and financial arrangements earlier. Similarly, you could consider other financial discussions around:

  • Credit card debt;
  • Car and investment loans;
  • Child support and other prior-relationship obligations.

According to the government’s MoneySmart website, when your relationship is getting serious, it’s a good idea to start having those chats. You know, the ones about:

  • Bank accounts: Joint, separate or a combination,
  • Children and schools, private, public, university etc.;
  • Life and Health Insurance;
  • Investment risk tolerance;
  • Lifestyle: House, holidays, entertainment;
  • Retirement planning: Will you spend now and save later or vice-versa;
  • Borrowing to invest: Property, share portfolios etc.

Establishing agreed goals around these subjects early can help set expectation and facilitate strategic financial planning.

But what if you have different goals and attitudes towards money?

Couples unable to agree, or misunderstanding one another’s goals and money attitudes, may encounter difficulties when decisions need to be made. Communication is key in relationships. If talking about money is difficult, start small and honestly.

If these discussions feel too uncomfortable, the Australian government offers an assistance service. Contact the National Debt Helpline on 1800 007 007 to speak with a financial counsellor. Additional services are available for small business owners, farmers or people in regional areas.

Alternatively, kick off those discussions by introducing your partner to your financial adviser. You don’t have to have the same goals, but by understanding and creating a plan that suits everyone’s needs, you’re off to a good start.

Have some questions? Want to know how it applies to you? Want a review of your personal situation? Click here to book a Free 15 Minute Discovery Session, give us a call on 1800 577 336, or email us at hello@wealtheon.com.au.

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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