Fran Hughes: How to keep love’s light burning with a committed financial relationship

Weddings are a diligently orchestrated event, with an incredible emphasis placed on selecting the perfect dress, the perfect venue, the perfect honeymoon.

Unfortunately, setting up the perfect system for our newly combined finances is often given less consideration than the colour of the napkins on the bridal table.

It isn’t just the newlyweds who need to be mindful about joint accounts and combined purchase decisions.

The Australian Institute of Family Studies estimated that in 2017 81 per cent of couples lived together prior to marriage, and trends would suggest that most of us live with another person in a committed relationship at some point in our lives.

Collaboration on household finances is going to be just as important as working out who is going to be responsible for washing the dishes. Here’s a starter kit for all those new love-struck couples.

What are we adding?

When we join our lives together, most of us are bringing things with us. Sometimes that’s an inheritance, a flat full of furniture or a car. And sometimes it’s credit card debt and student loans.

Putting all the details on the table with your partner will create a solid understanding of what your combined financial foundation is going to look like. From there it’s easier to make decisions about future plans, set timeframes for goals like holidays or buying a house together.

This can be a hard conversation to have, especially if we have a financial history that we’re not proud of, but the benefits are significant.

What are we taking?

What we need and how much it costs is probably going to be different for each of us.

Just the difference in the cost of haircuts for men and women demonstrates that looking good carries a different price tag from person to person, and that’s before we even consider the costs of participating in hobbies and leisure activities.

Having a conversation around what our current and anticipated expenses are will set realistic expectations about a budget going forward.

What are we sharing?

Now we have our financial foundation, and we know what we’re going to need to spend, we can think about how to design our perfect financial framework.

Do we want to share an account to pay for rent and utilities? How do we want to save for holidays together? How much of what we earn should we keep for our own expenses, and what expenses will we be solely responsible for?

These are all topics we can discuss to get a better picture of what our expectations can be about the day-to-day management of our funds.

There’s no rule that says we must have joint accounts with our partner. In many cases couples will maintain separate accounts or take a hybrid approach where some accounts are shared but others are not.

Deciding on a system which works is much easier now that we have a clear picture of everything. It’s important that you both feel you have shared responsibility for your financial wellbeing, and that you have a clear understanding about what can be acted on independently.

Practice makes perfect

The best part of this process is that we don’t have to stick to a system if it doesn’t work.

Talking things through regularly means we can make adjustments and make our financial framework work even better for us. If we didn’t grow up in a family where conversations around finances were common, talking about these things with our partner can feel awkward at first until we’ve had time to practice.

It’s important to remember that our combined finances are just as important to our wellbeing as other parts of our relationship, and that we’re both on the same team.

Are you ready for a romantic date to talk finances?

Fran Hughes is a Certified Financial Planner and Head of Financial Solutions at Nexia Perth www.nexia.com.au