Mixing money with love
Updated: Dec 12, 2021
The days of the sole breadwinner looking after all the family finances without any involvement of their partner are long gone. With two-income families more often the norm, both parties in a relationship should have a say in the financial situation and have a good understanding of what's going on.
Pre-nuptial, or Binding Financial Agreements, don’t sound very romantic but they do make sense in some situations - particularly where one partner has considerably more assets than the other before marriage.
Pre-nuptial agreements have had a formal legal standing in Australia since 2000. It’s important that both partners seek advice because these contracts can be set aside by courts if found to be unjust or unreasonable.
It’s also critical for couples who are looking at entering into such an arrangement to have a full understanding of their finances as well as agreeing on how income and expenses will get shared among them. And this should include any future inheritance too.
You may already be planning to get married, or even living together right now, but it's important for both of you discuss the following points openly:
Make a budget that will cover your income and expenses in the long term. Who pays for what? If one person has a higher earning potential than another, does it make sense that they should foot more of the bill toward living expenses? This can be delicate - but will keep things clear and open.
If wedding bells are near – who will pay for what? Be clear about your expectations of each other.
Be sure to cover the costs of any children from previous relationships.
Will you have joint bank accounts and debit/credit cards, and how will bills be paid?
If one partner is expecting an inheritance, or some other lump sum, discuss how it will be used and whether it will be kept in one name or in both.
It doesn’t matter if you’re 20 or 50, like most issues that arise in relationships, the best way to avoid future problems is to have open discussions on financial matters early on, and then allow love to flourish.
Shaun O'Keefe helps families feel more financially secure. He's found that he can help more people, more effectively when he helps families. As a fee-based financial planner, he works with families just like yours to bring personal values and financial resources in line so that you can keep focussed on the priorities in your life.
The information contained in this article is general in nature only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision concerning a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.