This brief article outlines the role of money in close personal relationships. It lists some financial points which should be considered.
These days there are few relationships in which the sole breadwinner also looks after all the finances without any involvement of their partner. With two-income families more common than past decades, both parties in a relationship have a say in the financial situation and an understanding of what is going on.
While pre-nuptial agreements don’t sound very romantic they do make sense, particularly where one partner has considerably more assets than the other before marriage. Such agreements have had a formal legal standing in Australia since 2000 but it is important that both partners seek legal advice as these agreements can be set aside by the courts if found to be unjust or unreasonable.
Even more important than a legal agreement is a full and open understanding of joint financial affairs, and mutual agreement of how income will be shared and expenses paid.
Whether you are already living together or planning to, some of the important points to discuss openly include:
1. Make a budget for income and expenditure that you can both agree on.
2. If you are planning a wedding, how will the costs be split?
3. Be sure to cover the costs of children from previous relationships.
4. Will you have joint bank accounts and credit cards and how will bills be paid?
5. If one partner is expecting an inheritance, or some other lump sum, discuss how it will be used and whether it will be kept in one name or shared.
Like most issues that arise in relationships, the best way to avoid future problems is to have an honest and open discussion on financial matters early in your relationship.
Sources: Australian Bureau of Statistics, Cat 4102.0, Australian Social Trends Data Cube 1996-2006 www.abs.gov.au/ausstats
If you wish to discuss the role of money in close personal relationships further and the steps you should be taking, please do not hesitate to contact our financial planners here at Leenane Templeton.
Call (02) 4926 2300 or email us.