finance

All the questions you need to ask your partner before you start a joint budget.

MyBudget
Thanks to our brand partner, MyBudget

Talking to your partner about money for the first time can often feel a little uncomfortable. In fact, it can feel uncomfortable any time.

But having the ‘money chat’ early on can save a lot of financial-based problems in the long run.

That doesn’t mean talking about money on the first date, but according to money expert and founder of MyBudget, Tammy Barton: “There are other subtle ways to learn about another person’s money values, just by observing their general conversation and spending habits.”

Speaking to Mamamia, Tammy says that when looking for a partner, people often overlook the importance of financial compatibility.

“Money isn’t everything, but sharing the same money values can make life easier. If one person’s a saver and the other one’s a spender, for example, you can assume that at some point there’s going to be tension.”

 

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How do I start talking to my partner about money?

To gauge whether they’re on the same page as you about money, Tammy suggests asking your partner (and even yourself) the following questions:

  • What does financial security look like for you?
  • What are your financial goals?
  • What do you want to achieve with your money in the next few years?
  • What are your thoughts around saving for a house?
  • Do you prefer the idea of joint or separate finances?

While you have the best of intentions, sometimes your partner may find it difficult to talk about money. For some people, it still feels a little taboo.

“That might be because they’ve had bad financial experiences or they don’t feel financially literate or they’ve been brought up to think of money talk as inappropriate,” she says.

The good news is, there are ways to talk about money without having a serious sit-down conversation about it.

“If the relationship is relatively new, you could suggest saving for a holiday or concert ticket together,” Tammy advises. “This will tell you a lot about how your partner feels about saving. If you’re already living together or about to move in, household budgeting is a good way to talk about money in a practical ‘nuts and bolts’ sense.”

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However, if your relationship is beyond this stage and money has become a problem in your relationship, seeing a financial counsellor or a money coach might be the better option. This way you can get the issues out in the open, clear away the emotional charges, and come up with a plan.

What happens if one of us earns more than the other? 

Tammy says she finds the healthiest relationships are when couples have a ‘team mentality’ towards their finances.

One person may be out working while the other is raising the children or both people could be in full-time work but earning different amounts. Either way, healthy couples approach their finances like a team, not a power struggle.

“Early on in a relationship—say you’ve just started living together—I would suggest that both partners maintain separate bank accounts and split the bills 50:50,” Tammy says.

That being said, life isn’t always that neat and easy.

“One partner may be able to afford to pay more rent or to eat out more often and this puts pressure on the other partner to keep up with a lifestyle they can’t afford. That’s where it’s best to be honest about your financial situation and talk about it calmly together before money becomes a problem.”

Or if one of us has debt that needs to be paid off? 

We all know debt is a minefield topic in relationships.

“If I was dating someone who came with a debt hangover, I’d firstly be interested in the situation that led to it. Was it a once-off event, the result of habitual overspending or a deeper problem?” Tammy says.

“Next, I’d look at their attitude to paying off their debt. Do they have a strategy in place? Are they willing to talk about it with you? These conversations are how you protect yourself from STDs—Sexually Transmitted Debts!

“If you’re good with money, you can be supportive by helping your partner create a budget or by managing aspects of their finances for them, but you shouldn’t feel that you have to take responsibility for their debts for them.”

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Talking frankly about your financial mentality will save a world of pain later. Image: Getty.
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What do I need to know about making a budget?

Once you're on the same page about your finances, creating a budget is often what comes next.

"People hear the word 'budget' and think 'income, bills, expenses, blah blah blah'. But budgeting is so much more than that," Tammy says.

"It’s the process of creating a customised plan for your money and your life. It’s about working out your financial priorities and what you want to achieve with your money this week, this month, this year, this decade, this lifetime.

"It’s not just something you do, it’s a philosophy you live. And when you manage your finances well, it goes a long way towards your life working out exactly the way that you want it."

So, the best place to start with your partner, before you start on your budget, is with a conversation about your financial goals.

  • What would you like to achieve with your money?
  • Pay off your credit card?
  • Get on top of your loans?
  • Pay your bills on time? Save for a holiday?
  • House deposit?
  • Replace your washing machine?
  • Buy a new car?

And so on. Realistically, you may not be able to achieve all of your goals all at once, so you then need to prioritise them.

What do I need to include in a budget? 

This is often the point of the process where it goes wrong, according to Tammy.

"People create a budget for themselves with all the basics included and then an unexpected bill comes up or they need to buy a birthday present and the budget falls off the rails," she says.

"For a budget to work properly, it needs to be detailed and flexible. That’s why MyBudget’s system is so effective. When you make a change to your budget, you instantly see how it effects your bills and projections over the next 12 months.

"So, in other words, the most important things to include in your budget are everything. It’s important not to leave anything out—annual bills, Christmas costs, subscriptions and so on, as well as a savings safety net for unexpected bills and changes."

How often should I check my budget and make adjustments?

If you’re managing your own budget, Tammy suggests doing weekly updates or whenever a new bill arrives or something in your budget changes.

"Try to automate as much of your budget as possible with automatic transfers and payments. But the real key to remember here is that you don’t get financially fit by just looking at your budget."

Tammy says you get financially fit by living your budget. Just like physical health is a sum of your daily food and exercise choices, financial fitness is a sum of your daily money habits.

"It’s making your lunch at home instead of buying it; it’s taking the bus instead of a taxi; it’s saying no to after-work drinks when you haven’t budgeted for it; it’s setting yourself an affordable budget for clothes and sticking to it," she says.

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"That’s why MyBudget’s system is so effective—because our clients have access to their exact financial position and future outlook in their pocket 24-7, with all their bills and expenses and savings and goals mapped out before them.

"When they make a change to their budget, they see their short and long-term projections change before their eyes. They don’t have to worry about setting aside savings or paying bills manually — it gets done directly from their budget. And whenever they have a question or need help, they can message their support team for advice."

What about unexpected expenses, like a bill?

Tammy says it's not a matter of if unexpected bills will come up, but when. And don't we know it. So, your budget needs to be dynamic and flexible to account for change.

Budgets should have a safety net or contingency fund for rainy days - at that should equate to around three months’ pay, Tammy advises.

"You can build up your contingency fund in a couple of way. One is to set aside a little bit of money from every pay into a separate savings account. Keeping your safety net money separate from your spending money is really important because it reduces the chance of accidentally spending it," Tammy explains.

Another option is to build your contingency fund from your tax refund or leave loading or sales bonus or any other extra income you get throughout the year.

What if I'm saving towards a goal, like a holiday? 

Savings goals are integral to figuring out what you can afford when you do want to spend.

"Let’s say you’d like to take your family to Bali next year. Start by talking to travel agents about your options and put together a holiday budget that includes everything: flights, accommodation, food, activities, spending money and so on," Tammy says.

"Now sit down and look at your household budget. How much can you afford to save from every pay? If your holiday budget is $4000 and you can afford to save $100 a week, it’ll take you 40 weeks to reach your target. Your budget will also reveal spending areas where you might be able to cut back to save for your holiday faster."

And if you've got kids, involve them in the process too. From Tammy's experience, it's a great way to teach kids about money.

So matter your situation, it's never too early to start having "the money chat". Except maybe the first date!

For more information on how MyBudget can help you take control of your finances, get started here.

This content was created with thanks to our brand partner, MyBudget.

How do you talk to your partner about money? Tell us in the comments section below. 

MyBudget

Taking the next step with your finances is really simple with MyBudget. The 24/7 MyBudget App takes care of everything for you, including your income, bills, savings and spending. You will have more confidence with your money, because you’ll know it’s always in the budget! Live the life you want, because no budget with MyBudget is ever the same, it’s designed with you and personalised to your needs and goals. MyBudget clients say they are life changing, so what are you waiting for? MyBudget is dedicated to helping people live the life they want free from money worries and is recognised as the nation’s leader in personal budgeting services. Visit mybudget.com.au today.

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