Money conversations you must have with your partner

Money conversations you must have with your partner

Whether you’re planning your wedding or you’re about to go on your first date, there are a few questions you need to get out of the way to help determine whether you are compatible and share similar financial priorities. 

  1. Who pays on a first date? 

A question for the ages, and one worth discussing before you’re left in an awkward bill stand-off at the end of the date.

RateCity research found that three quarters (71.2 per cent) of men will pick up the entire bill, with a third of women (30.3 per cent) expecting them to! 

However, it may not come down to gender stereotypes, with one in three people earning $30k or less saying they expect to pick up the bill on a first date. Compare this to a stingy one in five earning $150k or more who expect their date to pay.  

  1. Have you ever been bankrupt? 

Bankruptcy is an issue that can impact more than just your credit score. For the sake of transparency, it may be worth discussing your financial failings alongside you triumphs with your partner. However, some people are quick to judge their partner’s financial history. 

Women are more concerned about a partner’s financial history than men, with nearly 60 per cent admitting they wouldn’t marry someone who had been bankrupt. Fewer than half of men shared this same concern. 

Perhaps the older we get the less judgemental we are, as two thirds of millennials say they wouldn’t marry someone who had been bankrupt, but more than half of baby boomers would still say “I do”. 

  1. How will we divide the financial decision-making? 

Whether it’s choosing who will pay the bills or deciding when to buy a new car, ideally, you’d want to discuss all major financial decisions before they’re made and divide it all equally. However, for many people having one set “decision-maker” is an important issue.  

RateCity research found that 65.9 per cent of men believe they are the financial decision-maker in their household. But only 9.9 per cent of women think that their partners call the shots. 

  1. How much debt do you have?

Much like the topic of bankruptcy, many Aussie couples may be concerned about the level of debt their partner has, or is capable of accumulating. Australian Securities and Investments Commission’s (ASIC) credit card debt clock currently shows that Australians owe $32 billion in debt – an average of $4,200 per card holder.

If one member of the relationship is more prudent, then the level of debt their partner has may be of concern, particularly when it comes to marriage or sharing finances.

RateCity research found that around half of Aussies say money has caused an issue with a loved one, and 41 per cent of divorced couples say money caused significant issue with a partner.

  1. What should we save for? 

Would you rather invest in property or in experiences? Talking to your partner about what you want to save for will help you to determine your priorities. If one party is ready to settle down and buy a house and the other is planning on blowing their savings on a 3 month Eurotrip, you may not be on the same page. 

If you’re both interested in combining your savings, it’s worth comparing high interest savings accounts with competitive features and low fees. As these types of accounts pay higher interest than everyday accounts, they help you reach your savings goals sooner. 

 

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Learn more about savings accounts

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria