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.

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.

Is it ever OK to lie to your partner about money?

Relationships and money. It’s fair to say it’s never easy but the reality is it can be incredibly destructive as well.

At one end of the scale we’d all be guilty of buying ourselves a little treat which we’ve not admitted to our partner out of guilt or not wanting to start an argument. But when it gets to a stage where you’re telling big lies, which amounts to basically defrauding your partner, then the whole fabric and foundation of your relationship is in jeopardy.

Over the years we’ve seen them all as people have contacted us for guidance. Would you believe 15 per cent of middle aged Australians lie to their partner about their salary and a surprising number of people keep a secret stash of money in case of divorce. These are the top money lies which have been revealed to us and we believe have the potential to destroy your relationship.

Lying about your job… or not having one

Employment is generally the primary income source of most relationships. It’s the foundation on which you develop your household budget, plan your dreams around and build your goals as a couple.

The lies can start from exaggerating your income to pretending you’re worth more than you are, to understating your salary and skimming off the excess to a secret account. Either way you’re deceiving your partner and it’s serious.

The saddest lie we’ve seen in this area is when a partner is retrenched or fired and they’re too scared, or embarrassed, to tell their partner. They then lead a fictional life of pretending to go to work and living with that emotional burden. It melts your heart.

In every one of these types of cases we’ve encountered the other partner is generally so understanding and distressed their spouse didn’t trust them to be supportive.

Lying about being financial equals

This is a very dangerous lie. Where one partner takes full control of the household finances, jealously guards that position of power and constantly argues everything is under control, it’s the best thing for the relationship and they would never do anything to hurt them.

But they are lying. They aren’t doing it in the best interest of both of you, only in the best interests of themselves. As a means of power and controlling you.

Don’t fall for it. And don’t get sucked in by an indignant “don’t you trust me”. Frankly, if they give you that line then you know you shouldn’t trust them. When it comes to money in a relationship, it has to be completely transparent and equal.

Lying about having a punt or making a secret investment

Yes that little online betting account you keep to yourself. “But it’s so small it’s not worth talking about,” we hear you say. Well, if it’s not that significant you won’t mind sharing it with your partner!

The problem comes when that little online account has a losing streak and you need to feed it cash by stealth. Losses can build on losses to a point it becomes significant and an embarrassing secret which will cause huge ructions. The same goes for that risky investment you kept hidden and it goes sour. The risk simply isn’t worth it.

Lying about paying your share of the bills on time

In our household, Libby looks after the household expenses and David pays the mortgage and superannuation. A lot of couples split expenses on the understanding that you trust each other all commitments will be paid on time. When they’re not, be honest and work together on a plan to get back on track.


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Lying about how you earn money

It might be moonlighting at a second job or freelancing on the side. Either way lying about where the money comes from has two problems no matter what form the lie takes.

Firstly, it leaves your partner unable to correctly estimate how much money there should be, and unable to notice any missing cash. Secondly, it can make a real mess of your taxes and any government benefits which are based on total household income. As for earning money secretly AND illegally… that is a lie which can have dire consequences.

Lying about your level of debt

Alarmingly statistics compiled from Galaxy Research reveal 52 per cent of Australians either lie about their debts or hide their spending from those close to them.

Money you put toward paying off debt is money that can’t be used elsewhere, for you or your partner. Debt lies can range from whether you have any, to how much, to how long you have to pay, to whether you’re making the payments regularly.

The harsh reality is that as a couple you can, in many circumstances, inherit someone else’s debt. If they skip out of the relationship, you could be left holding the responsibility for paying. It’s called Sexually Transmitted Debt. Secret debt can also be a telling insight into how your partner handles money and whether they have the right financial discipline.

Lying about loaning money to friends and family

The sob story is always compelling, and you’ve known them all your life, but lending to friends and family can be fraught with danger. Especially if you keep it secret from your partner and, especially, if it isn’t their friend or family.

The problem with lying about loaning money without your partner’s go-ahead is pretty basic.

Lying about having bank accounts your spouse didn’t or doesn’t know about

A lot of couples have separate bank accounts for a whole range of reasons… and that’s fine. But having a secret bank account isn’t about independence or having a stash to buy gifts for each other. It’s lying and it’s deceptive. Have separate bank accounts if you want but be open with each other about them.

The impact of grey divorce on financial wellbeing

Older Australians are divorcing more than ever before, with many struggling to get back on their feet financially after a split. Grey divorce rates in particular are soaring, with big jumps in the number of men and women divorcing aged 50 and above.

Apart from coming to terms with the emotional pain, one of the biggest problems for older people after a divorce is figuring out how to rebuild their finances. With the bulk of their working years behind them and limited assets after the high expense child rearing years, it can be difficult to recover their married standard of living.

We have a number of friends in this situation, so we have seen first hand how tough it can be. Here are our observations on how to handle marital problems when you’re over 50, and where to turn if things are really going pear shaped.


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Why does it happen?

Your fifties is a decade of massive change….kids leave the nest, work slows down and the body gently reminds you to take things a bit easier.

Some empty nesters, after the distractions of raising kids stops, realise that with so much else going on their relationship has been left behind.

But before calling quits on any serious relationship, it’s in your financial and emotional interest to try to work it out with your partner first.

Lorraine Murphy, Director of Clinical Services at Relationships Australia, says that it’s important for both partners to come together to focus on making things work. If there hasn’t been a serious indiscretion to cause the relationship to fail and you’ve simply grown apart, then you could try counselling, being more open with each other or just spending more time together.

In your fifties, there’s a good chance you’ve spent some of the best years (or decades) of your life with each other and done some amazing things, so why not give it another shot?

Getting a divorce

If things have gone seriously downhill and the relationship can’t be salvaged, it’s important to be smart about how you handle the settlement.

Women have to be especially careful. The average Australian woman will live five years longer than a man but has a superannuation balance that’s 43 per cent lower. So dividing the family assets fairly in a split is important to maintaining quality of life.

Plus, some women may not have a complete picture of the family finances, particularly if they’ve left the workforce to focus on raising children. Make sure you are fully informed about all aspects of your financial relationship… bank accounts, investments, insurances etc. Know where all the important documents are kept.

When the decision to split is made protect your access to joint bank accounts, cancel joint credit cards and set up your own, change passwords and generally be on guard about any funds which may “walk”.

One of the most important considerations will be what to do with the family home and any investment properties. While it may seem like a great idea for one partner to keep the house, consider the ongoing maintenance fees and the fact it ties up money in an illiquid asset.

For a couple that is asset rich but cash poor, a good option can be to sell the house and split the proceeds.

Lastly, while your split may be amicable, it’s always wise to secure copies of all financial documentation and engage the services of a lawyer to organise the settlement.

Murphy also recommends visiting your local Family Relationship Centre for information and confidential assistance. Otherwise, in the event things do get ugly, the Family Court may have to resolve the situation.

Moving on

Once the divorce has been finalised and you’re out on your own, it’s more important than ever to be smart about finances. With one income and set of assets, you’ll need to put together a plan about how you’ll make things work and achieve your desired quality of life.

It’s a good idea to seek financial advice to ensure you’re on the right track. And finally, don’t forget about estate planning: update the will to reflect your new situation.