Finding financial balance, together

As any relationship expert will tell you, good relationships require communication and negotiation. Good finances usually require the same.

How we manage finances with our partner is pretty personal and it may even change with our relationships and age. Some of us relish being the home’s financial director, while others are happy to hand over the lion’s share of financial decision making to a partner. A balanced approach however is worth considering and may even be more beneficial.

If you’re keen to achieve greater financial balance at home, either getting your partner more involved or being more hands on yourself, here are three steps to get the conversation started.

Step One: Identify and align your financial goals

“It’s a good idea to identify and discuss your financial goals to see if you’re on the same page or need to compromise” says Trisha Edmonds, Head of Advisory Distribution.

You may be thinking about saving for a home deposit, funding your children’s education or taking more than one holiday per year, while your partner may prefer to put your savings in a share portfolio or an investment property. When your goals are aligned - or at least laid out before you both - you can then prioritise and choose the best financial strategies to meet those goals.

“What financial advisers tend to find  is that women commonly seek financial freedom and can visualise this end goal,” Edmonds says. “They can see long-term what it means for them and their family. While men also seek financial freedom, they can focus on the return and tend to figure out how to invest their money as they go.”

“There is no right or wrong approach here, but when both partners have a shared goal and understand why they are sacrificing something today for tomorrow, financial freedom is more easily achieved, whatever that may be.”

Step Two: Shared decision-making

In many relationships there is usually one person that takes more responsibility for the couple’s finances, according to Edmonds. For example, this can be based on one partner having more time or financial experience.

By creating financial equality in a relationship and sharing the decision-making, you can help ensure both people are aware of their financial strategies, the risks and outcomes.

“People who didn’t have much exposure to financial management as they grew up can find it difficult to get connected to their finances or may be embarrassed to ask questions,” Edmonds says.

It’s in your interest to understand major financial decisions, as it could affect your future.

If you’re unsure what finance strategies are in place in your relationship or how they work, consider talking to a financial adviser. They can explain the finer details so that you are fully across the decisions being made.

Keep in mind that it’s your choice how much you want to be across your finances: there is no right or wrong.

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Step Three: Consider taking out insurance that protects both of you

When considering a financial plan for your relationship and future, it’s important that it’s protected in the event of unemployment, illness or death. For example, if you suffered a serious accident or illness, and were unable to pay your mortgage, Total Temporary Disability Cover could help cover this cost.

However, as Edmonds notes, sometimes only the breadwinner will take out personal insurance, which can cause financial difficulties down the track. For example, if your partner has Total Temporary Disability Cover and you don’t, and you become sick, their insurance will not provide them with any cover to take time off work to care for you.

If you both contribute to the running of the household, whether that be financially or through taking care of children then you should both consider being insured, because your finances will be impacted if either of you are out of action.

If you want finances to be part of the ongoing discussion in your relationship, identifying your financial goals, sharing decisions and both considering taking out insurance are great first steps to starting the conversation.

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Published July 2015

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