Janet Xuccoa’s latest book, Women & Money: Mastering the Struggle, is for all women wanting to take control of their finances, become financially independent and adopt a whole-life approach to money and wealth. A successful professional and investor, Janet shares financial insights revealing how money works and what is required when investing in assets to create financial wellbeing. Here is an extract from the chapter Money, You and Your Partner.
Personalities, race, culture, spiritual beliefs, upbringing and education are all interlinking factors that shape the values and attitudes we hold about money. These, in turn, affect our own behaviour in relation to our spending, saving and investment habits. Understanding ourselves, our behaviours and motives and the money decisions we make takes huge insight. Add another person into the mix and fertile ground for disagreements exist. In fact, research has shown money is one of the main topics of contention couples face.
Much anguish and conflict over money could be avoided if couples would only discuss the subject early on in their relationships. Women don’t bring this topic to light because they think to do so is unromantic. Alternatively, they don’t wish to be branded impolite or be labelled a gold digger. Given the lack of open communication, it should come as no surprise that as a relationship develops and behaviour patterns are established, conflict over money arises. To avoid escalating differences, I’ve seen many women remain silent, refusing to broach the subject.
Even when conflict isn’t present, frequently women leave the responsibility of managing finances entirely to their significant other, labouring under the mistaken belief their partner is financially more capable and thus equipped to make better quality financial decisions than they could ever hope to make. Regardless of circumstance and reason, the consequence of not having a voice and not participating in the monetary aspects of a relationship puts women at a distinct disadvantage. It can leave a woman uninformed, subject to control and open to vulnerability. This is especially so when you consider the increasingly high rate of divorces that transpire.
Divorce aside, statistics show men die before women. The outcome for a woman dealing with her partner’s death is very similar to that of a divorced woman – she is placed in the position of having little knowledge about money and investments (or the lack thereof) if she has not participated in the financial facets of the relationship whilst her partner was alive.
To help you build a romantic relationship free of conflict over money and at the same time, a strong financial foundation, I’ve written this chapter. It contains suggestions to assist you in the fiscal activities you’ll engage in as you build your future together.
When people decide to live together, naturally they feel excited about their decision. They’re embarking on the serious commitment of building their future, full of promise, with each other. At this point, their predominant thoughts involve where they’re going to live and how much closet space they’re going to get. Not a lot of thinking time is given over to the subject of money.
Whilst money itself isn’t the sole determining factor of a successful relationship, a lack of money can certainly add an ingredient of stress. Tensions and fighting can result, threatening your connection and ultimately your relationship. To minimise the arguments that may occur, I advocate sitting down with your partner and having an honest and open discussion about finances before co-habitation. In particular, I recommend you:
- Discuss the money beliefs and values you possess. You should gain an understanding of each other’s risk profile and the personal investment philosophies you have from this discussion. If you’re going to create a financial future together, you’ll need to learn this information.
- Explore the financial goals and time frames each of you has. It’s best to know prior to becoming entwined if your aspirations are complimentary and what time frames you have around your own goals. You’ll also want to know if your goals are going to be separate or joint. For instance, you don’t want to embark on living with someone thinking that in the near future you’ll be buying a home and having a family when your partner is planning a world travel itinerary for the best part of the next three years. Nor do you want to find yourself in the position of spending all your money on buying furniture, which by the way depreciates in value, whilst your partner spends their own funds on acquiring investments which they have no intention of sharing with you.
- Share information about your current asset and debt positions. You may find your perceptions don’t corroborate with financial reality.
- Disclose your current respective incomes and expenses. This is vital because in today’s age it’s a common occurrence to find people have legal obligations that require regular payments such as student debt repayments and child support payments, for which Lawyers in Townsville can provide essential guidance and support.
- You want to be aware of such commitments before you set your joint financial plans.
- Agree on the apportionment of living expenses. If there is a discrepancy between incomes, it can be burdensome if the party on the lower income has to meet 50% of all common expenses. This can lead to hardship being felt by one party and eventually, resentment can creep into the relationship. Best to know upfront the expectations each of you have around meeting expenses.
- Decide how you’re going to deal with money as a couple. For example, will both of your incomes be considered joint money? Will you have a joint account to pay for shared expenses and hold the balance of your income in your own account for personal spending? Determine an arrangement that works well for both of you.
- Reach an agreement regarding the assets you wish to remain your separate property. Nowadays, many people own assets before they enter into a relationship. If you want those assets to remain solely yours, you need to obtain legal advice and document your agreement. Often ownership arrangements and intentions are structured using Trusts, Prenuptial Agreements and Relationship Property Agreements. If you don’t address this issue, devastating loss may result. Ignore this advice at your peril.
I encourage you to have a financial discussion incorporating the above recommendations prior to setting up house together. The reasons for this are several-fold:first, you need an awareness of the other’s current financial position in order to plan a financial future together; second, you’ll be able to establish how each of you regards money which will help you deal with financial differences when they occur; lastly, discussing money highlights your financial similarities and identifies where your differences lie, which assists in building financial compatibility. In this respect, research has shown financial compatibility is a principal ingredient of determining the overall compatibility of couples.
Accordingly, to increase your levels of compatibility, you should ensure your financial thinking and behaviours are aligned.
Featured image: wayhomestudio – Freepik
Edited extract from
Women & Money: Mastering the Struggle
by Janet Xuccoa,
Cheshire Publishing,
RRP $34.95