By Jackie Pearson
11 February 2009
What to do when the bills, credit cards, personal loans get in the way of your relationship – a Valentine’s Day guide to financial and relationship bliss.
You love the same music and movies, share the same tastes in furniture, art and food. You even discuss politics and religion peacefully. But what about your attitudes to money? If you’re embarking on a new romance this Valentine’s Day or rekindling an old one, sorting out exactly where you stand on matters financial can be an excellent way to ensure your relationship is long lasting.
Image by PoYang
MONEY DOES MATTER
Relationships Australia’s most recent Relationships Indicators survey (2008) found that the number of people saying financial pressures were a major stress in their relationship had doubled in two years. The survey found 40% of the 1200 adults listed money troubles as a major source of pressure on their relationship.
SET THE GROUND RULES EARLY
Relationship and credit counsellors say the best way to ensure money hassles don’t sour your romance is to set some ground rules at the beginning. Decide how you are going to manage your finances. Will you maintain separate financial lives or combine your assets, investments, savings incomes and debts?
This is a very personal decision that doesn’t need to be rushed. One way to find out whether you are financially compatible before you completely combine assets and liabilities, incomes and expenditure, is to work towards a joint goal – perhaps opening a bank account to save for a holiday. Monitor how well you discuss and manage the project together before you get in too deep.
WHAT’S MINE IS YOURS
Combining your finances has many advantages. Condensing two households into one can automatically cut your expenses and give you more disposable income, making it easier to save. But it also has a downside.
For example, if you apply for credit together, and one of you has a poor credit history, your application may be rejected. This declined application will then be recorded on both of your credit files and can make it difficult to successfully apply for loans in the future.
WHAT’S YOURS IS MINE
Be clear about what you consider to be your own role and responsibilities and about what you expect of your partner. Decide together who will pay bills, manage the day-to-day expenses and keep on top of saving and budgeting.
Taking the step from romance into a financial partnership not only means joint ownership of assets but joint responsibility for liabilities. If you place both names on a lease, telephone or electricity account, you are both equally liable for payments.
Likewise with credit cards, personal loans and mortgages . If you enter a loan as a co-borrower and your partner doesn’t live up to their side of the bargain you can be left to pay the whole debt.
GREAT TIME TO GET AHEAD
Current record low interest rates and government incentives make it an excellent time for couples who are on the same financial wavelength to get out of debt and get ahead financially. One strategy is to consolidate all your existing debts into one personal loan.
You will both need proof of earnings and to be able to demonstrate your ability to repay within your means. Both credit histories will be checked before a loan is approved. Both applicants will need to have steady work histories and it will help if you haven’t moved houses too many times.
Financial and relationship counsellors say it is important to recognise the warning signs that money is becoming a problem in your relationship. They include:
- Your partner spending money without telling you,
- Inability of one partner to stick to a budget or
- Pressure to enter a credit agreement that you disagree with