Moving in before marriage: what it means for your money

Around 80 per cent of Australian couples will live together before they get married.

Back in our courting days the quaintly termed “living in sin” had a stigma about it. Not today, where it’s seen as the sensible thing to do. A sort of test drive strategy.

Yes it’s practical but it also comes with financial consequences.

As a general rule of thumb, if a couple live together for longer than 2 years then they have a claim over the assets of the relationship similar to as if they were married.

You are co-mingling your money which means you need to prepare for what happens if you don’t end up buying after you’ve tried.

Even if it doesn’t work out romantically, house sharing with someone else still involves working out the financial practicalities.

Protect the assets you bring with you. The key here is good record keeping. List all the assets you bring, get them valued at the time the relationship starts as a base level and clearly valuing any assets from inheritances and windfalls is important.

Add your name to the lease. In the unfortunate event that you break up with your partner and one of you has to move out, the person whose name is on the lease is in the best position to maintain possession of the space. If both names are on the lease, both people have a more equal opportunity to remain in the apartment and renew the lease.

Create a personal budget. Before you agree to rent a new apartment or pay a removalist, stop and create a budget for your new monthly bills that includes rent, utilities, and anything else that you may now be paying for as a couple. Don’t forget to include your moving expenses, security deposit, new furniture, etc. Make sure it stays within your budget and you can cope financially.

Purchase items individually. That way, in the unfortunate event of a breakup, the person who paid for the TV or bed is entitled to it, and the person who bought the sofa can take it or swap it with their partner for something else.

If you want to contribute equally, then build the shopping list, value them and then each pay for individual items up to the agreed amount.

Keep good financial records. Keep receipts, bank statements, credit card statements, or a journal of shared expenses and purchases to make it easier to divide things up later. If things go pear-shaped it’s good to have the right records to sort out any claims of one contributing more than the other.

Be very careful of joint debt. Whether it be credit cards or home loans, if they are jointly held then you are liable for your partner’s responsibilities as well as your own. If they skip out without paying, you could be liable for paying their debt commitments.

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Make time for regular talks. The majority of money problems can be traced back to a lack of communication between partners about their finances. That’s why in a serious relationship it’s a good idea to regularly set aside time to talk about money together.

Even 15 minutes a month can make a world of difference. We don’t mean paying bills and checking credit card statements but actually talking about the big financial issues… goals and dreams for your money, setting a plan to realise those dreams and monitor how you’re tracking.

Work as a team. Couples who manage their money successfully know that you have to work as a team to avoid potential problems. A good option to help the camaraderie is to set savings goals that you both have to contribute towards, and build a budget together to ensure that you’re both spending consistently. We’ve said it before, and we’ll say it again, couples that save together stay together.

Don’t keep secrets. Our feeling is that if you’re together in love, you’re together in money, so we’ve always made a point of being open about finances in our relationship.

If you don’t trust your partner enough to be transparent, at some stage you have to question what you’re doing with them in the first place.

Let them know about hidden bank accounts or inheritances, and make sure to be candid about any debts lurking in your closet.

And don’t fall into the trap where one partner controls all the finances; make money matters a joint decision. If your partner uses the old “don’t you trust me” line, respond with “don’t you care for me because what will happen if you suddenly get hit by a bus.”

If they still want to control the finances by themselves… get rid of them.

Open a joint account. Joint accounts are a handy way of fairly dividing household bills and also a great way to reinforce trust in a relationship. If you do go down this path, it’s important to set some ground rules around what the joint account will be used for.

Our view is that just because you may earn more than your partner doesn’t give you the right to have a different spending pattern… it’s a partnership of equals both emotionally and financially.

Get smart about couples finance. Once you’ve got the basics right, there are plenty of more advanced ways you can take advantage of being in a healthy financial relationship.

For example, saving money by taking out insurance as a couple, looking into consolidating your reward and credit card benefits to get results more quickly, and salary sacrificing options if one partner isn’t working or earns significantly less.


Are you confused about money? Kochie’s Money Makeover will show you practical strategies to improve your finances. Find out more.

Kochie’s 16 signs of financial maturity

How many times are we told to “act like an adult”, “grow-up” or “get a bit of maturity”… whatever that means.

Whether it’s behaviour, humour, manners or lifestyle there’s a level of expectation which governs the opinions of others. To make grown-up decisions.

It’s the same with money. Financial adulthood means taking ownership of your money rather than just letting it happen. Using your money to match your values and to finance your dreams.

Just like adulthood, there’s no really strict definition of financial maturity to benchmark ourselves against. So here’s our checklist to what we think you need to tick off  to reach monetary adulthood.

1. Have a credit and a debit card. Be able to pay your monthly credit card balance on time and in full… without going into overdraft on your transaction account.

2. Know your credit score and check your credit report at least annually. It’s pretty easy by going to www.getcreditscore.com.au. Knowing your score gives you power to negotiate better deals and checking it ensures there are no costly mistakes.

3. Consolidate your superannuation into one fund, which you understand and check regularly. Ideally, you’d be making extra annual contributions up to your age limit. Remember superannuation is the second biggest asset of most Australians. It accounts for 26 per cent of our net worth.

4. Have an emergency fund. As a general rule, the ideal is to have 6 months worth of salary in a separate savings account to use in case of a financial or medical emergency.

5. You have adequate insurance protection. For you (life, income protection), health, car and household insurance. The amount of cover depends on your age, commitments and circumstances. Often it’s best to get expert advice and recommendations.

6. Have some form of a financial budget… in writing. There are so many budget templates out there and a huge number of good smartphone apps. There is absolutely no excuse not to have one but also make sure it’s constantly updated.

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7. Know your take-home pay every month…after tax. We know this can sound a bit simple, but you’d be amazed at how many people don’t know the amount they earn. Add in any regular overtime or part-time jobs. This is the cornerstone of your budget.

8. Know your net worth. It is simply the value of your assets (house, investments, superannuation balance, car etc) less the debts you owe (home loan, credit card balance, personal loans etc). Do this calculation annually as it provides a concise barometer on whether your personal wealth is improving or not.

9. Spend less than you earn. Living within your means is the absolute foundation of financial maturity. It’s not complicated. Don’t spend what you don’t have.

10. Have a system for remembering and paying your bills on time. Whether that’s setting up a direct debit for regular costs or a calendar alert in your smartphone, you shouldn’t be forgetting about bills, or leaving them unpaid. If you automate payments, regularly check the statements are correct.

11. Know when you’re going to be debt-free. Credit card debt (and to a lesser extent personal loans) has extremely high interest rates. A rule of thumb is that if you have consumer debt you should have no savings… it should be used to pay off debt.

12. Know your financial goals and how you’ll achieve them. Looking after your money better can be pretty boring if there are no goals you want to achieve. Could be buying a house, going on a big holiday, paying off the car, putting the kids through school… the goals are endless. Having a goal provides an automatic map of how your finances will be used to make your life better and more enjoyable. It also gives you an incentive to stick to your plan.

13. Plan your tax better. Everyone has to pay tax to do our bit for keeping Australian society and services the way they should be. The aim is to pay the right amount of tax and not more than necessary. Start by improving your record keeping, use good tax software or meet with an accountant or tax agent.

14. Organise your important documents. We have what we quaintly call our “death file”. One spot where all the important documents are kept in case one of us (or both) die. The deeds to the house, wills, bank details, investment records etc. In other words, records of your financial life should be kept in the death file. Many people digitally scan the documents into a folder and email them to their loved ones for safekeeping.

15. Be able to confidently negotiate a better deal or challenge a payment. But be polite while doing it. If you don’t speak up for your money, no one will. For example, never automatically pay an insurance premium without asking for a better deal or question an unknown expense on your credit card statement.

16. Be able to say no to expenses you can’t afford or don’t want. On the other hand, know when it’s most important for you to be able to say yes, and figure out how to afford the things that mean the most to you. Being a savvy spender is crucial to financial security. Determining which is an important expense and which is frivolous can save you a fortune.

Kochie’s challenge for couples: 15 minutes a month

Here’s a challenge. This year we want you to set aside 15 minutes every month to talk about your money with your partner.

Doesn’t sound much, but think about it, when was the last time you sat down with your partner to talk about your finances?

Financial worries are a leading cause of relationship breakdown, and so often relationships are put under strain for the simple reason that partners do not talk about what they each want from their money or understand where it goes.

So what happens in your 15 minutes a month?

We’re not talking about paying bills, checking the credit card statement or doing the banking. That’s managing your money and not the objective of these sessions.

Instead, we want you to start thinking about the big picture… together.

Start the first month’s 15 minute session by just getting organised and making sure you both know where all your financial documents are kept and whether they’re actually up-to-date.

Collect all the insurance policies (life, disability, health, home and contents etc), check the cover is still right for you (if not shop around for alternatives) and put them in the one place where both of you can easily access them.

The same with mortgage documents, superannuation accounts and reports, bank documents, investment records as well as tax returns and receipts.

Then there’s the will. No-one likes talking about the possibility of death but the prospect of leaving your family in the financial lurch is just plain stupid. Read each other’s wills and make sure they’re current and relevant.

Just knowing where your financial safety nets are stored and what’s in them is a great start.

One of the most common questions we receive is ‘what can I do with my money?’ Our immediate reply is ‘what do you want your money to do for you?’ In other words you have to decide first.

So for your second session use the time to think about the future, what you each want from it and how to afford it.

Write down your needs and wants. Do this individually first, and then share them with each other.

Surprised? Shock horror? Or were you both on the same track? Sharing the ‘want’ lists is usually the eye-opener. It’s highly likely there will be some surprises there.

These lists will form part of your regular budgeting and, like all good budgets, they are not written in stone. Budgets should be reviewed at very regular intervals and change as your wants and needs change.

Another session should look at your investments and super. Have you accumulated too many super funds? Are you in the right superannuation investment option which matches your risk profile and stage of life? Is it time for both of you to visit a financial planner to talk about a long-term plan?

These are just examples, everyone is different and you can use the sessions to discuss whatever is most important for you. So here’s another challenge. Start tonight. 15 minutes a month is not a lot to ask to think about your financial future.

Kochie’s Christmas Quiz!

‘Tis the season where children around the world are judged on whether they are “naughty” or “nice”… and their reward from Santa is based on the result.

The threat of Santa’s retribution is always a great stick for parents in the months leading up to Christmas to demand better behaviour from their children.

But are you game to be judged by the same rules when it comes to managing your money? Have you been financially “naughty” or “nice” over the last year, and what sort of behaviour do you need to change to get a better reward? If you’re game, take our 14 question quiz to find out.


Q1) When it comes to my credit card, I…

  1. Can’t seem to pay off the balance each month.
  2. Heavy user but always pay it off by due date
  3. Switched to using a debit card so use my own money

2) My savings routine

  1. Is non-existent
  2. I put something away when I can afford it.
  3. Every pay day I transfer part of my salary to a separate savings account.

3) When I go shopping…

  1. I buy what I need
  2. Go with a plan in my head
  3. Make a list and stick to it

4) If there is a financial emergency…

  1. I borrow to cover it
  2. Will do without other things to get over it
  3. Dip into my emergency fund which I’ve built and is equivalent to 6 months salary

5) In terms of estate planning…

  1. Who cares, I’ll be dead anyway
  2. I have a will which I made years ago
  3. Have a will which I review every 1-2 years

6) Insurance is…

  1. Way too expensive and I can’t afford it
  2. Necessary on important assets like house and car
  3. Essential to protect assets plus income and life

7) I think about my money…

  1. Rarely. It’s too scary and I have better things to do
  2. Whenever I pay any bills or am asked for information
  3. Every month for about 20 minutes to make sure I’m meeting my budget and goals.

8) When it comes to investing…

  1. I’d rather spend it as you only live once
  2. Like taking risks because I want to be rich quick
  3. Trying to build a diverse portfolio of quality assets

9) My financial goals are…

  1. What are you talking bout?
  2. Trying to make ends meet with what we’ve got
  3. Set every year for the short and long term with clear steps on how to get there.

10) My job…

  1. Sucks and the boss is a bit dodgy but I’ll stick with it
  2. Is okay but I’m looking around for something better
  3. Offers great opportunities and I’m trying to improve my skills to assist my potential.

11) My superannuation is…

  1. Limited to the compulsory contributions from the boss
  2. Growing fine because I’m in the right fund option
  3. Boosted by extra age based contributions

12) My property holdings…

  1. Don’t exist because I only like shares
  2. Currently just my house and I’m paying down the loan
  3. Are a good balance in my overall portfolio.

13) My share holdings…

  1. Don’t exist because I only like bricks and mortar
  2. Consist of a handful of speculative companies
  3. Are a good balance of quality stocks in my portfolio

14) Charity…

  1. Starts and ends with me
  2. Is basically a World Vision sponsor child
  3. I donate a fixed percentage of my income each year.

How did you go? Hopefully it made you think. If your answers were;

Mostly 1s … YOU’VE BEEN NAUGHTY

Why are reading this section of the newspaper? We’ve failed you miserably.

If you’re new to this section then you need to keep coming back because we reckon we could help a lot.

You are a financial mess and you need to get your act together in 2012. It isn’t hard. It’s just common sense and a bit of discipline.

Start by doing a boring old household budget because you need to understand where your money is coming from and where it’s going too. That budget will point out obvious areas to cut back and focus you on maybe earning extra income through a second job or turning a hobby in to a money spinner.

The next step is get that debt under control. You should have no savings if you can’t meet credit card repayments on the due date. All savings should go in to getting that debt under control because it’s just too expensive to keep.

Then do some basic financial housekeeping. If you have a family or partner, you need a will and you need insurance to protect your income and cover any financial obligations if you die.

Also spend some time each month (it only needs to be 15 minutes) thinking about your money and financial situation.

That’s enough to start off. Look at answer C to each question above for hints on how to change financial behaviour.

Hope to see you back here each week and we’ll work together for Santa’s approval next year.

Mostly 3s… YOU’VE BEEN NICE

Santa is very pleased with you… great work. You look as though you’ve got most of the essential financial bases covered and should be fairly comfortable.

But such a good score doesn’t mean you can sit on your laurels. None of us can.

The world is changing pretty rapidly so the biggest challenge for you is to keep abreast of the investment cycle and that means continuing to build your knowledge.

The thought of learning about money should scare you anymore so broaden your knowledge base.

Start buying investment books, reading websites like Bloomberg and CNN Money or subscribing to investment newsletters.

Maybe touch bases with your financial planner, broker or accountant to check on how things are going.

Hopefully Santa’s gift to you this each is financial peace of mind

Mostly 2s… YOU NEED WORK

Hey that’s not a bad result. You’re a sort of financial Goldilocks… things aren’t too bad but you’re certainly not cruising.

The danger is you could be content with that position when a few minor changes could improve your financial situation considerably.

You’ve done all the hard work on the basics but that extra couple of steps could put you on easy street.

Everyone’s different, and it’s hard to generalise, but you’re probably the type of person who gets the basics right but are bit scared to go to the next level from money management to investing and building wealth.

It’s probably time to sit with a financial planner and map out a wealth building plan. Nothing flash, nothing risky. Just a plan to building a strong investment portfolio to secure your future.

Make sure you keep control of any decision making only commit to what you understand and are comfortable with.

What your kids want to know about money

Every parent knows children can ask the most disarming questions which can leave you laughing, crying, embarrassed, angry, squirming… or all four at once.

Whether it’s questions around looks, sex, death or money, children don’t have a filter in their enquiring minds. But your first response can often set the tone for an answer which can have a huge impact on your child’s future opinions and behaviours on the subject.

With four grown up children and 5 grandchildren, we’ve been bombarded with an enormous range of questions about life and money. So how do you answer those tricky financial questions when they come up.

Rather than stumble around thinking about what to say to a confronting question, we always had a universal first response… “why do you ask?”

Not only did it buy us time to think through our response, the answer would put into context why the question was being asked. Often a parent’s brain is so conditioned to answering questions from adults that we tend to over complicate our response when a child’s reason for asking can be very innocent and simple.

In the past any discussion about money with children was seen as grubby, one of those taboo topics never to be discussed. It produced young adults ill prepared in simple matters of money management which often led to some very expensive mistakes.

Our fear is that the pendulum may have now swung to the other extreme where children are too exposed to the strains of the family finances with the risk that they will grow up to fear money and making mistakes. So, like everything, it’s a balance between sharing too much about your finances and satisfying an enquiring mind which will also absorb healthy financial habits. Naturally how much you reveal to children depends on their age.

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Q; Are we rich? A; Tell me what rich means to you?

A child’s idea of rich can be quite different to ours. To them it is mostly about size and material objects. A big house, a flash car, a swimming pool, can be seen as a sign of being rich.

There is no need to give a definite yes or no answer. Explain that you have enough money for a house, clothes and food. Then steer the conversation toward the theme that being rich isn’t as important as other qualities such as being kind to others, being polite and being healthy.

Q; How much money do you make? A: Enough to care for you and the family.

The number really isn’t important to a child because they will have no idea of the context. Remember their benchmark will be their pocket money.

But your answer is a great excuse to explain how you need to earn income to pay for the expenses of the family.

Show them what their pocket money would buy and then go through your weekly household budget (at an age appropriate level of detail) to give an idea of what else needs be paid. Explain you need to earn enough to pay for all these expenses and have a bit left over for things like holidays and eating out.

If they start to get bored then you know they aren’t quite ready for the full financial field trip. But if they’re still intrigued then go further.

The first time we took our kids through our supermarket bill and compared it to their pocket money brought gasps of astonishment. It showed day-to-day items, which are often taken for granted, do have a value and shouldn’t be wasted.

We would also break down the cost of an item into how many hours they’d have to work at McDonalds (all our kids had part time jobs at McDonalds) to pay for it. The message really sank in.

Drag them along shopping and show that consumers have choices. That big brand names are often more expensive but not necessarily better. That supermarket prices are usually more expensive at eye level on a shelf than above or below. Take them shopping and treat it like a field trip and pass on your canny shopping tips.

For older children go through your on-line banking and explain what a financial institution does, the concept of earning interest and the difference between the range of accounts. The same with the credit card statement. Explain that bit of plastic isn’t a money tree and it has to be paid back, often with interest. Whip out the debit card and explain the difference.

Q: Why does my friend live in a bigger house than we do? A: I don’t know, but why is that important?

Always admit the obvious… that other people do have bigger houses… and that it’s okay to be different. Explain people think differently, like different things and have different priorities.

They may like a big house instead of going on holidays or eating out. Or they have been given the money to buy a large house or borrowed more to own it.

Some people choose jobs to earn more money to buy a big house while others choose a job which makes them happy rather than get paid a lot.

Explain you have a job which makes you happy and can pay for a house like what you have now.

Q: Why can’t you have a job that makes more money, so we can buy more things and go on holidayA: This is the job I love and you wouldn’t want me to do a job that made me grumpy and unhappy?

This is one of those questions which can rip your ego to shreds and make you feel incredibly inadequate. While the question feels aggressive don’t answer it that way.

It’s a perfectly normal question for a child to make in an ever increasingly materialistic world.

It’s a chance to explain your family priorities which aren’t all centered around money and material possessions. It’s about love, being a family and enjoying the simple things in life.

Go through your values and how you set financial goals. Explain that you cant have everything and sacrifices have to be made to pay for things like holidays. Remember when everyone’s having a good time on vacation, remind them of the little sacrifices which had to be made to get them there and it’s worth it.


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Kochie’s tips for managing money together

Nothing can tear a relationship apart more than financial issues. It can set couples against each other and fester into something incredibly destructive.

We’ve been married almost 39 years and, at different times, endured significant financial hardship. We’ve found that it is so much easier to cope with these strains if you have a relationship built on strong financial foundations and values.

Here are our strategies for managing money as a couple;

1. Have no money secrets

As soon as a couple is in a committed relationship they will declare their entire financial world to each other. That means coming clean about their salaries, credit card debt, university debt, credit score, betting accounts and anything else that might affect their financial future as a couple.

It can be a tough discussion to confess all your money secrets but it is crucial to your future as a couple. It really is the first place to start to build a household budget and set goals.

No financial skeletons in the cupboard.

2. Talk a lot about money

It doesn’t matter so much what couples do with their cash, but that they make decisions together and respect each other’s opinions.

We recommend you set aside atleast 15 minutes a month to just talk about your money. Not paying bills or checking credit cards statements but talking about the parameters of managing your finances.

Be open and be honest and don’t be afraid to disagree. Just as each relationship is unique, each couple’s financial situation is as well. It’s a time to look at the big picture financial situation and whether you’re comfortable with where you’re at.

3. Set specific goals

Successful couples come up with goals together and check in frequently to make sure they’re on the same page… as part of their 15 minute catch-ups. They break them down to short, medium and long term goals and constantly refine them.

Do you want to purchase a home together? Are you saving up for kids? Do you want to add extra superannuation? Or plan a big trip to finance? Successful couples talk about where every dollar is being spent and reset their goals regularly.

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4. Divide up responsibilities

One partner should never have sole responsibility for a couple’s finances. That is a recipe for relationship disaster which can lead to financial infidelity and abuse of power.

Whether it’s opening joint accounts, paying the rent or mortgage, the power bill, superannuation contributions or other expenses, it’s the responsibility of both parties. Successful couples don’t assume their partner will take care of certain aspects, they work together to divvy up financial responsibilities.

There is no right answer on who looks after what, but it’s important to be on the same page and not let it default to one person or the other without having a conversation about it.

Partners should discuss joint bank accounts, who’s paying which bill, and how they want to use any discretionary income as a team. At the end of the day, it’s all about clear communication.

5. Protect what you have

When couples bind their lives together, it doesn’t just create an emotional bond, but a financial one as well. If something were to happen to either spouse, it’s better to be safe than sorry and know the other person is taken care of.

That means adequate insurance cover. The greater the financial responsibilities (home loan, consumer debt, children, expenses) the larger the cover to protect against losing an income stream from a partner.

Life, income and trauma insurance is essential depending on your circumstances plus adequate coverage for major assets such as house, cars and valuables.

6. Plan for the unthinkable

Though often overlooked estate planning, such as wills, are key factors in a successful financial future. As soon as they walk down the aisle, couples should think about naming beneficiaries, executors, and powers of attorney. When kids come into play, it’s important to name guardians for them as well.

Not only that, but couples should update these documents at least every five years, as goals and circumstances can drastically change over time.

7. Never judge your partner

Everyone has different priorities, and part of operating within a partnership is to respect your partner’s choices. That includes keeping an open mind, for example, if your spouse’s spending habits differ from your own.

If you truly think your partner has a spending (or thrift) problem, then it’s time to have an honest and loving conversation with them. If you’re just annoyed that they spent money on something that you would never spend money on, give your partner the benefit of the doubt.

And pick your battles. A small purchase that doesn’t impact on your financial goals and plans is nothing to get annoyed about.

8. Live within your means

Spend less than you think that you need to, or earn. It’s that simple.

It all starts with that age-old family budget which tracks expenses and income to make sure the former doesn’t exceed the latter. Then it’s the personal discipline to stick with it. To forgo when necessary and cut back when it’s right.

The reward is having money left over to achieve a goal like investing or taking that dream holiday.

9. Set strong ground rules

Your spending habits are no longer purely your own; they affect someone else as well. That’s why it’s crucial to decide how and when you’ll spend, and create a set of ground rules for handling money that works for both you and your partner.

Don’t forget every relationship needs a bit of individual independence to flourish… and that includes money. Each person needs a level of discretionary spending for which they’re unaccountable to support hobbies, gifts and passions.

10. And finally… have fun!

Saving or investing just for the sake of making more money is boring. Life is for living and a good financial relationship will help you to live better… and have fun.

Money can be a point of contention, but successful couples don’t let it run their relationship. They don’t make it the ultimate goal, they use it to fuel other goals.

7 warning signs of financial abuse… and how you can protect yourself

Financial abuse in any family or relationship is a powerful and dangerous form of intimidation which is a lot more common in Australia than you think… not just celebrity divorces.

What makes financial abuse even more insidious is that the abuser often justifies their actions as caring.

But the bottom line is that financial abuse can leave the weaker partner extraordinarily exposed.

This sort of abuse often takes the form of a partner in a relationship, or a parent over a child, or an adult child over an elderly parent where the abuser completely controls the finances of the other person and refuses to share any of that responsibility or information.

Financial abuse could be;

. having sole access to bank and online accounts.

. controlling PIN codes

. taking out joint loans without a partner’s consent

. restricting access to insurance, superannuation and estate planning documents.

. limiting access to cash and credit cards

. making investment decisions without consultation

. asking a person to sign financial documents without explaining what they are.

We’re not talking about situations where a couple has agreed one partner takes primary responsibility for running the finances but is always happy to keep the other partner informed.

A financial abuser is a partner which has insisted on controlling the finances, is secretive about what they’re doing and will not share information.

To test which sort of partner you have simply ask for them to explain the state of your finances, provide access to all accounts and show where insurance and investment documents are kept.

If they refuse, you need to worry.

If they say, “you don’t need to worry about it, I have it all under control”. You should worry.

Explain that you’re concerned if they drop dead you’d have no idea where anything was and that is just too risky and you’re feeling vulnerable.

If they refuse after that, you’re in real strife and must do something about it. Your partner either has something to hide or they have such a controlling personality it will put you at risk in the future.

What if your partner does die… or leaves you?

We had friends where the husband walked out of a marriage and left his wife with the comment “you be nice to me or you won’t get a cent”. They owned a family business but she had no idea where they banked, what they earned, investments, insurances, estate planning… nothing.

We put a team of professionals together to help her and she ended up okay. But she should never have been in that position.

Sexually Transmitted Debt is just one of many risks. It’s where one partner in a relationship is lumbered with the debts of the other. You’d be amazed just how common this problem is.

One partner will rack up debts on the joint credit card, refuse to pay or skip out and the other partner is left with the responsibility of paying the whole debt. Joint cards or loans don’t mean you’re responsible for your half. It means both people are responsible for the whole debt if the other can’t pay.

Here are some steps to protect yourself from financial abuse;

  • Base financial decisions on economics, not emotions. If you trust each other then there is no problem with formalising that trust by keeping each other informed about financial decisions.
  • Don’t dismiss it. Read it. When you have to sign papers it is better to be one day late than to lose everything in five years time just because you were too busy to read the small print.
  • Going guarantor: If the bank does not have confidence in the principal applicant, why should you? Remember, when you sign as guarantor, you are indicating you are prepared to take over the debt if the borrower defaults.
  • Know where the money is coming from and where it is going..
  • If you have a joint account with your spouse, make sure the bank does not allow payments above a certain amount unless there is joint agreement.
  • Look carefully at how you buy assets… single names, joint names, their name, your name? It could all be extremely relevant for both tax purposes and if the relationship splits.
  • If you are a director of a family company you have a right to see the books. Insist on the accountant showing them to you. If stopped from doing so, you can take action under the Companies Code.
  • Agree on a financial plan. This way both partners have common goals and know where they are heading.

In our relationship, Libby has always run the day-to-day finances and I’ve run the investments. But each of us has full access to everything and make big financial decisions jointly.

How to protect yourself financially when you move in with your partner

Around 80 per cent of Australian couples will live together before they get married.

Back in our courting days (yes we’re old enough use a quaint term like that) “living in sin” had a stigma about it. Not today, where it’s seen as the sensible thing to do. A try-before-you-buy sort of strategy.

Yes it’s practical but it also comes with financial consequences. Sorry to put a dampener on the romance, but that’s the reality.

As a general rule of thumb, if a couple live together for longer than 2 years then they have a claim over the assets of the relationship similar to as if they were married.

So “try before you buy” can end up costing you half your assets. You are co-mingling your money which means you need to prepare for what happens if you don’t end up buying after you’ve tried.

How to protect yourself before moving in

According to lawyers, protecting assets you brought to a relationship starts with good record keeping. Getting assets valued at the time the relationship starts as a base level and clearly valuing any assets from inheritances and windfalls is important.

Co-habitation agreements are basically like pre-nuptial agreements for couples that aren’t married. If you don’t plan to marry your partner any time soon, and it would make you feel more financially secure, then it is worth looking into. An agreement such as this would protect both parties and their assets. It also defines the relationship, property rights and liabilities between the two of you.

If you decide that, yes, you would like to draw up such an agreement between you and your partner, then you would need to engage legal counsel. The cost of this is all dependent on the lawyer and firm you use, the complexity of the situation, the amount of assets or points that you want covered, but mostly how much of the lawyer’s time you take up.

We would advise you to research as much as you can before you get to this step to avoid any unnecessary time or costs.

Ongoing financial housekeeping can also keep some sort of financial independence in a relationship. There may be reasons for each of the partners to continue with separate bank accounts into which their wages are deposited and specific expenses are paid. A household budget should be completed as soon as you move in together, particularly if separate bank accounts are to be maintained and each partner is responsible for separate expenses.

It’s also a good test of whether you are both financially compatible. There is nothing more horrifying than finding you’re in a relationship with a compulsive shopper if you’re a spendthrift. Such incompatibility can ruin a relationship.

Formal agreements (renting and buying)

How to own a property is also an interesting decision. There are two choices; ‘tenancy in common’ or ‘joint tenancy’. Tenancy in common assigns each of the partners direct ownership of a nominated portion of the property. It means each is responsible for their own mortgage and share of the property.

A joint tenancy agreement means each is jointly and severably responsible for the entire property and the mortgage. If you’re renting add your name to the lease. In the unfortunate event that you break up with your partner and one of you has to move out, the person whose name is on the lease is in the best position to maintain possession of the space. If both names are on the lease, both people have a more equal opportunity to remain in the apartment and renew the lease.

Quick couple tips for moving in together

. Create a personal budget. Before you agree to rent a new apartment or pay a mover, stop and create a budget for your new monthly bills that includes rent, utilities, and anything else that you may now be paying for on your own. Don’t forget to include your moving expenses, such as moving supplies, security deposit, new furniture, etc.

. Purchase items individually. That way, in the unfortunate event of a breakup, the person who paid for the TV or bed is entitled to it, and the person who bought the sofa can take it or swap it with their partner for something else.

. Communicate. The majority of money problems can be traced back to a lack of communication between partners about their finances. That’s why in a serious relationship it’s a good idea to regularly set aside time to talk about money together.

Even 15 minutes a month can make a world of difference. We don’t mean paying bills and checking credit card statements but actually talking about the big financial issues… goals and dreams for your money, setting a plan to realise those dreams and monitor how you’re tracking. Just a regular 15 minutes a month will not only ensure you’re both on the same page, it will also allow either partner to raise any issues that might be bubbling away under the surface.

. Be open. Our feeling is that if you’re together in love, you’re together in money, so we’ve always made a point of being open about finances in our relationship.

If you don’t trust your partner enough to be transparent, at some stage you have to question what you’re doing with them in the first place.

. Work as a team. Finally, don’t fall into the trap where one partner controls all the finances; make money matters a joint decision. Financial bullying, where one partner controls the finances at the exclusion of the other, is incredibly dangerous for the victim.

If your partner uses the old “don’t you trust me” line, respond with “don’t you care for me because what will happen if you suddenly get hit by a bus.”

If they still want to control the finances by themselves… get rid of them. We’re serious. If you have a partner who refuses to share financial information your entire relationship is in trouble.

 

Why YOU should be teaching your kids about money

Parents, you need to start a financial bootcamp for your kids. 

Why? The latest OECD survey on teenage financial literacy has found Australian standards have fallen since 2012… and 20 per cent of teenagers are below the minimum standard of knowledge. But before we start pointing the finger at schools, we should be point fingers at ourselves.

Numerous research shows teenagers learn virtually all of their financial knowledge by observing their parents. Think about it, and your money behaviours? It’s a bit scary the kids are watching you that closely.

It’s always a fine line between including children in so-called “adult decisions” to help with their personal growth and protecting them to enjoy a stress free childhood.

Household finances are a classic example. In the past any discussion about money was seen as grubby, one of those taboo topics never to be discussed. It produced teenagers and young adults ill prepared in simple matters of money management which often led to some very expensive mistakes.

The key is coming up with a constructive middle ground…. Remembering you are the best financial tutor for your children. Here are our tips on what to share… and what not to.

5 financial skills to teach your kids, for more visit moneysaverHQ


WHAT TO SHARE


✔ Financial goals

It’s great to let children see that you’re saving for something which benefits the whole family. It could be buying a car, saving for a family holiday or even new clothes.

It’s a great life message that you can’t have everything you want without a bit of planning and a little sacrifice. When the goal is achieved and you’re sitting under a palm tree sipping a cocktail, remind the kids what it took to get there and wasn’t it worth the planning.

Paying bills

We always laugh at the outrage from our adult children when they read their first payslip and saw the amount of tax taken out. All of a sudden they realise who pays for the roads, schools and hospitals.

Likewise, the first time we took them through our supermarket bill and compared it to their pocket money. It shows that day-to-day items, which are often taken for granted, do have a value and shouldn’t be wasted.

We would also break down the cost of an item into how many hours they’d have to work at McDonalds (all our kids had part time jobs at McDonalds) to pay for it. The message really sank in.

Making good consumer choices

Drag them along shopping and show that consumers have choices. That big brand names are often more expensive but not necessarily better. That supermarket prices are usually more expensive at eye level on a shelf than above or below.

Take them shopping and treat it like a field trip and pass on your canny shopping tips.

✔ Everyday financial experiences

Go through your on-line banking with the children and explain what a financial institution does, the concept of earning interest and the difference between the range of accounts.

The same with the credit card statement. Explain that bit of plastic isn’t a money tree and it has to be paid back, often with interest. Whip out the debt card and explain the difference.

Charitable donations

We would always talk about making donations (not the amount but the organisations) because we wanted to show that everyone has a responsibility to help others in the community. We also insisted they donate a percentage of their pocket money to a charity of their choice.


WHAT NOT TO SHARE


✘ How much you earn

All a child wants to know is that you’re able to look after them. They want that security.

Dollar amounts are often confusing and they have no concept of the extent of what that figure needs to cover. So it’s better to avoid a figure and just say “enough to make sure we’re okay”.

✘ Level of debt

A 25 year home loan is a scary prospect for any aged child… 12 months is a long way off. So explain the concept of debt and how to use it properly to acquire things which hopefully appreciate in value. But avoid talking numbers or whinging about how long it will take to pay off.

✘ Investments

We think it makes sense to wait until children are late teenagers studying business or economics at high school or show an interest in investing. It’s confusing enough for adults.

When you do share, there’s no need to talk about dollar amounts, but talk about why you bought some of your shares and what moves prices. Relate shares to companies and brands that children use everyday like retailers, clothing or technology brands.

Then move on to explaining other investments and how they operate. Show them your superannuation statement and where the money is invested.

✘ Wills and life insurance

Most children hate the thought of being alone, of losing mum or dad. So don’t even attempt to explain wills or life insurance until they’re old enough to cope emotionally with the prospect.