The past 12 months have been a challenging time for many of us on a personal level, with the pandemic having a far-reaching impact on so many aspects of our lives. While the Australian economy is proving remarkably resilient, personal finances have been affected in different ways by lockdowns and government initiatives put in place to soften the economic toll of the pandemic.
Whether your finances were adversely impacted, or you came out of 2020 relatively unscathed; if you are in a relationship, you and your partner’s attitude towards your finances may have shifted. Given that money has the potential to be a source of conflict in relationships, now is a good time to get in sync and ensure that you are on track to achieving financial harmony.
Check in and see where you stand financially…
The first step is knowing where you stand financially. This involves looking through your shared and individual accounts and being open with each other about your saving and spending habits.
This is unlikely to make for a romantic date night given the potential for uncomfortable conversations, which is why one in three Australians admit having kept a financial secret from their partner.i However, by being transparent with your partner, you will be working through issues before they snowball into a source of greater financial and relationship stress.
Discuss or re-evaluate your goals:
We can all lose track of our end goals, especially when life becomes unpredictable and we need to shift focus. To avoid moving too far away from your financial goals, re-evaluate your priorities. These may have changed in the past year – maybe you have had to halt those travel plans or realised you no longer need or can afford that new car.
As you and your partner are two individuals, you might not always be aligned in terms of your approaches to saving and spending. We all have different, deeply entrenched views and beliefs around money, and it is one area that you may never completely see eye-to-eye on. That also goes for goals – we all have our own dreams and ambitions. Maybe one of you sees a need to renovate the bathroom, while the other thinks the money would be better spent on a holiday. Discuss the goals you both have and be prepared for compromise to find a plan that suits the family as a whole.
Re-evaluate your priorities and how you spend:
Priorities and spending habits can change over time and more recently, in response to a changed world. In 2020, 56% of Australian households surveyed believed their financial situation was vulnerable or worse due to the pandemic.ii As a result, you may have had less disposable income and therefore needed to access credit, or tap into savings or your superannuation.
It is important to acknowledge if your financial position has changed, reassess your priorities and make any necessary adjustments. This may involve taking a look at your spending and saving habits and making changes so that your dollars go towards supporting what is most important to your family. Again, it is important to discuss this with your partner and work through it together.
Develop a budget:
Budgeting is an obvious step, but you will need to ensure that the budget works for both of you, while supporting your shared goals. There are great budgeting apps you can use, but what you will both need to bring to the table is a commitment to sticking with the agreed upon budget. Discuss your household needs, such as mortgage or rent payments, utilities, etc., as well as your individual needs and what your shared goals are.
Try to agree on a system that keeps you both accountable. It can be as formal as filling out a spreadsheet every week, or perhaps having a monthly family meeting around how things are tracking and if there is any room for improvement.
Money talk in relationships can be tricky as it is often a loaded and emotive topic that can bring up other issues. This is why an adviser can help with these conversations by facilitating discussions in a safe and neutral environment and providing expert advice, tailored to your situation.
Please reach out if we can be of assistance.