Paul's Insights: Three ways to make love and money work
Valentine's Day is around the corner, and florists everywhere will be gearing up for a rush of orders.
Successful relationships are built on more than flowers or chocolates, and the way couples manage their money can shape the odds of enjoying a long and happy life together.
Three simple steps can help to build a strong financial foundation for your relationship.
- Talk about money
Money is a common source of conflict, with research by Finder showing one in two Australian couples argue about money-related issues. Almost one in ten quarrel over their finances on a weekly basis.
Sure, money can be a hard subject to broach but it’s worth a shot. Regularly talking about money goals and expectations can make it easier to find a solution when financial issues arise. According to an ME Bank survey, among couples who are comfortable discussing their finances, 61% hardly ever experience money-driven conflicts.
- Share goals but respect each other’s independence
For previous generations, having a joint account was often the norm in a relationship. And 70% of married couples still do, often using a joint account to achieve shared goals like saving for, or paying off, a home. Younger generations are bucking the trend though, with many opting to maintain separate accounts.
There are pros and cons to joint accounts. They can make us more accountable for spending, and that can be a plus for sticking to a household budget. However, they also bring the risk of one person taking full control while the other remains blissfully unaware of how the money is being managed.
The main thing is to decide what works for you as a couple while still taking an active interest in your combined financial well-being.
- Understand how your money behaviour could cause tension
Maintaining domestic harmony can be a lot easier when we avoid actions that are likely to trigger an argument. Greater Bank found that the three most frustrating financial behaviours in a romantic partner are being careless with money (cited by 95% of respondents), telling your other half how to spend their money (92%) and borrowing money from other people (90%).
There’s no magic formula for a lasting relationship, but it’s certainly worth getting the money side of being a twosome right. Greater’s research also revealed that for 42% of people who are divorced or separated, finances were a contributing factor behind the relationship breakdown.
The bottom line is that a dozen long-stemmed roses can certainly say ‘I love you’, but being able to have relaxed conversations about money could be the thing that sees your relationship bloom.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.