Australians have a traditional view of money and relationships according to wealth management company Yellow Brick Road.
Yellow Brick Road’s Valentine’s Day poll, conducted this month, revealed interesting insights into the moment Australians consider appropriate for a couple to merge finances. The most popular moment to merge finances was after the wedding (40%) with other moments ranking lower, including when you move in together (23%), keeping them separate forever (16%), upon engagement (10%) and before any major commitment is made (9%).
“Whilst there is no blanket best practice for couples and their finances, as the relationship progresses it is important to have open and honest conversations about money. Generally, if you’re discussing moving in together, getting engaged or married – it’s time to have the conversation,” Ms Douglas said.
Finances are still the leading cause of divorce with Relationship Australia’s research showing that 37% of women and 30% of men attributed financial stress as the cause of their breakup.
“Different spending habits can cause catastrophic fights that recur throughout the relationship. Without direct discussion, negotiation and awareness of each person’s individual money personality type, these fights can be the cause of major relationship breakdowns.”
“As we saw in our study, some couples think it’s cleaner and easier to just keep money separate but that is all up to personal preference,” Ms Douglas said.
Ms Douglas said when the timing is right, all couples should do a few key things to get started on a positive financial path together:
1) Plan for the future: Determine your hopes and dreams for the future as a couple and then reverse engineer them into a plan. Getting an expert to guide you through important financial decisions as a new couple will make a big difference in getting you on track.
2) Pay off debt: Make a plan to eliminate high-interest debt (usually credit cards) as quickly as possible. It also may be a good time to pay down ‘good debt’ (your mortgage). With interest rates at record lows, reducing your interest rate and keeping your payments the same can save thousands of dollars in interest off the life of your loan.
3) Create a savings plan: Know what you want to do with your money, how much you’ll need and what you need to do to get there. Goals don’t only give you a target to aim for, they also produce a ‘reward’. It may be a holiday you’re saving for or a house deposit or the down-payment on a new car. Whatever your savings goal, name it and give it a monetary value.
4) Have a financial security blanket: Putting aside money in an emergency fund is a great idea but one of the best ways to protect your family and assets as a newly married couple is to get proper insurances in place.
5) Protect your income: A relationship will be seriously challenged if your household income, or your ability to pay off your home, is halved due to accident or illness. Make sure your income is covered, and your mortgage repayments too.