Financial advice that can help couples

Perhaps you’ve moved in together. Perhaps you’ve tied the knot. As you and your partner build your life together, your finances will become more and more intertwined.

Lara Maloney

Lara Maloney

21 July 2022

In many ways this is a good thing: you spend less by sharing a home and dividing up bills, and with more income at your disposal you can make investments and treat yourselves more often.

In other ways your now shared finances can be a source of stress and anxiety. How should you split costs if one of you earns more than the other? At what point, if ever, should you open a joint bank account?

As with every aspect of your relationship, the key to enjoying more of the perks and less of the stress of shared finances is communication. You want to ensure that you understand one another’s relationship with money, that you’re on the same page, and that every decision is made together.

More specific advice will depend on your situation, so in this article we’ll take a look at the full spectrum of circumstances, offering financial advice for young couples, financial advice for couples living together, financial advice for married couples and more.

Can money issues ruin relationships?

The sad reality is that if left untreated, financial issues and disagreements can fester to the point that they cause relationships to fail.

Sure, some of those relationships were probably destined to fail, and financial issues were simply the straw that broke the camel’s back. But there are also times when the only issue in an otherwise happy and healthy relationship are those related to money.

Have you ever stopped to think about how your partner thinks about money, and how their financial philosophies might differ from your own?

For some people making money is the prime objective of their life, for others money is something they’re forced to use in order to live. Some people hate credit cards because they hate being in debt, others see them as useful tools, others still are happy to max out more than one at a time.

A couple might also earn very different salaries or be reliant on one person to bring home the bacon, which can add more layers of complexity into the mix, creating a messy financial tiramisu.

According to the Retirement Commission, 20% of Kiwis had relationship problems due to financial concerns, with rates higher in young people and low-income earners. So yes, if care isn’t taken, money issues can certainly ruin relationships.

Who should pay the bills in a relationship?

How do you split costs with your partner? Should couples split bills 50/50?

Our first piece of financial advice for couples is that there’s no one-size-fits-all approach to shared finances. Couples will need to sit down and figure out who will pay the bills, or how those bills will be split, according to their particular circumstances.

Often this is a very simple conversation – each partner pays their way in a 50/50 split. But there are a wealth of factors that can add confusion and complexity into the mix:

  • Moving into a partner’s place: Is the partner who moves in expected to pay rent or help cover the mortgage repayments?
  • Income and financial situation: If one half of the relationship earns less than the other or finds themselves in debt, are they expected to pay as much?
  • Culture and beliefs: Some cultures expect the man to earn the income and pay the bills for the household. Those who are particularly progressive may insist on a 50/50 split no matter the circumstances.

It should be noted that there can be significant legal ramifications when your partner helps to pay off your mortgage, including giving them a claim to the property. It’s therefore wise to seek legal advice about asset protection beforehand.

What are financial red flags in a relationship?

Financial issues in a relationship are far easier to fix, and ultimately far less damaging, when they’re caught early. Banks look at both partners when assessing applications, which means a partner with a bad credit rating or generally poor financial habits can have a direct impact on your own financial prospects.

The key to avoiding this situation is to identify potential red flags. Here are seven to look out for:

  • They’re secretive and avoid money talk: People who are secretive about their finances may have something to hide. If your partner isn’t even willing to talk about money, you likely have an issue.
  • They have multiple credit cards: No one should reasonably need a wallet full of credit cards. Any more than a couple could be a sign that your partner has a problem.
  • They’re bad at budgeting: Forming a budget and sticking to it is finance 101. A partner incapable of budgeting is a major red flag.
  • They consistently pay late: If your partner regularly receives late notices in the mail, it shows that they either don’t have the money or struggle to maintain the most basic control over their finances.
  • They don’t have a plan to deal with debt: If your partner is in debt, how do they plan to get out of it? You should be concerned if they don’t have an answer.
  • They regularly ask for money: Sure, many if not most of us will need financial help from family or friends at some point in our lives, just not every other week.
  • They try to control your money: On the flipside, your partner may be in a great financial position, but use it as a means to wield power in the relationship. Controlling your money without a good reason is a sign of potential financial abuse.

How do you overcome financial differences in a relationship?

Perhaps you and your partner have very different attitudes towards money: finance-focused versus carefree. Perhaps you find yourselves in very different financial situations: one person is deep in debt, the other has built up a war chest.

These differences can be a source of friction and can quickly blow up into larger issues. So how do you fix financial problems in a relationship? These four tips might help:

  • Make time to talk about money: It will feel like a chore, but put time aside in your diary to talk about your finances. This could be a one-off discussion, but ideally you’ll do it every month or so.
  • Treat it as a business discussion: Try to make money an impersonal (but still important) thing. Keep it to numbers on a page and avoid straying into the emotional specifics of the situation.
  • Understand each other’s money mindset: Put yourself in your partner’s shoes. By better understanding their mindset you’ll better empathise with them.
  • Bring in a professional: Consider investing in a financial planner. Not only will they give you great advice, they can also take on the pressure of discussing finances and making plans.

What are the best ways to manage couple finances?

Now that we know the issues to look out for, the situations to avoid and how to fix fiscal differences, let’s look at a few good examples of shared finances.

What are the best ways to manage your money as a couple? Here are five examples:

  • Keep an open dialogue: There are no secrets of any kind in a healthy relationship, including financial. Talk regularly with your partner about your money situation and any worries you might have. If it doesn’t happen organically, schedule in time every week or month.
  • Make decisions together: Every major financial decision should be ticked off by both you and your partner.
  • Create a budget: A budget isn’t just about living within your means. It also allows you to build up a nice portfolio of assets over time, to ensure you and your partner live comfortably well into retirement.
  • Set specific, achievable goals: The most successful couples set financial goals – go on a round-the-world trip, buy a home, start a family, retire early – then create a plan to achieve them.
  • Play it safe: It might feel a little morbid, but you need to create and regularly update your wills. Major assets should be insured, and you should ideally have emergency access to a chunk of savings. There’s also the small matter of financial advice for separating couples, which is perhaps a topic for another day.

What are the benefits of a healthy approach to couple finances?

The perks of a healthy approach to shared finances are many and varied, but include:

  • Far less stress: With everyone on the same page, there’s no secrets, no guesswork, no wondering what’s going on. You and your partner are in this together, and your mental health will be far better for it.
  • A deeper, healthier relationship: Healthy shared finances are about developing a deeper understanding of your partner and their relationship with money. You can then be more empathetic to their situation, which ultimately helps you to build a stronger, healthier relationship.
  • More financial freedom: A healthier approach to money generally leads to more of it, which will give you the freedom to do what you want to do: go on holiday, fund passion projects, buy that dream car.
  • Set yourself up: If you play your cards right, the perks of healthier finances can extend long into the future. You can buy a home, invest in the share market, or pour more money into superannuation for you to enjoy in your retirement.

Relationships can be complicated enough without money worries. But by following the tips above, you and your partner will find yourselves in a far more comfortable position, both in terms of your relationship and your finances.

Are you ready to maximise your shared finances? Our qualified financial advisers are ready to help.