When you’re in a relationship, managing finances can become one of the trickiest things to navigate, whether you’re planning things yourselves or seeking guidance from a finance professional, like someone with a Master of Applied Finance. Either way, having honest and open discussions about money is crucial to ensuring a secure future together.
Regardless if you’re moving in with your partner, tying the knot, or just building a life together, financial planning is necessary. Here are five important things to discuss with your partner when you’re planning your financial future.
Set Clear Savings Goals
One of the first things you should talk about with your partner is your savings goals. Everyone has different financial priorities, whether it’s buying a home, going on regular holidays, or building an emergency fund. Understanding what you both want to save for and how much each of you is willing to contribute can help set a solid foundation for your financial planning.
Start by making a list of both short-term and long-term savings goals. For example, if one of you dreams of travelling, while the other wants to save for a house, it’s important to find a balance between these goals. You might decide to set up separate savings accounts – one for the house, one for travel, and one for emergencies – or combine them into one shared account with clear priorities. Whatever you decide, make sure you are both comfortable with the goals and equally committed to reaching them together.
Align Your Money Values and Priorities
Everyone views money differently, and it’s essential to discuss your financial values and priorities as a couple. One partner might value saving for the future, while the other prefers to spend on experiences and enjoy the present. Understanding these differences can prevent misunderstandings later on.
Take some time to have an open conversation about how you each perceive money. Are you both focused on saving aggressively, or do you prefer a more balanced approach with room for spontaneous spending? Understanding each other’s financial mindset can help you set mutual goals that reflect both of your values.
If you’re struggling to agree, create a financial values list together. This could include determining how much you want to save for retirement versus how much you’re willing to spend on non-essentials, such as holidays or entertainment. Aligning on your financial values can make a big difference when it comes to making decisions and compromises down the line.
Be Honest About Any Debt
Debt can be a sensitive topic, but it’s important to address any outstanding debts early on in your relationship. Whether it’s credit card debt, student loans, or personal loans, understanding what each person owes will help prevent surprises and ensure you’re both on the same page when it comes to managing debt.
Sit down and be transparent about your individual debts. How much do you owe? What are the interest rates, and what are the repayment terms? This is also a good time to discuss how you’ll handle debt repayment as a team. You might decide to tackle high-interest debt first or split the responsibility based on income. Regardless of how you approach it, making a plan to manage debt together will help you both feel more secure financially.
Decide on Shared vs. Personal Accounts
When it comes to managing money as a couple, one of the biggest decisions you’ll need to make is whether to merge your finances or keep them separate. There’s no one-size-fits-all approach, and what works for one couple might not work for another. Some couples prefer joint accounts for shared expenses, while others prefer to keep separate accounts for personal spending.
Discuss what feels right for you both. A popular approach is to have a shared account for household expenses such as rent, bills, and groceries, while maintaining separate accounts for personal spending. This allows you to pool your resources for the essential stuff while maintaining financial independence for personal expenses.
Make sure you’re clear on how much each of you will contribute to the shared account, and set expectations about personal spending. For instance, you might agree that both of you will cover 50% of joint expenses, or you might decide to contribute based on your respective incomes. Setting clear boundaries around money will help you avoid conflict later on.
Plan for Retirement Together
It might seem like retirement is far off, but the sooner you start planning, the better. Discussing your retirement plans as a couple is vital for ensuring you both have a comfortable future. The primary way to save for retirement in Australia is through superannuation, so it’s important to understand how your super is tracking and whether you need to make additional, voluntary contributions.
Start by reviewing both your super balances and discussing how much you want to contribute to your super in the coming years. If one of you has a smaller super balance, it may be a good idea to adjust contributions so that both partners are on track for a similar retirement.
In addition to contributions, talk about what you envision for retirement. Do you see yourselves travelling the world, moving to the coast, or simply enjoying a quiet life with family? Aligning on your retirement goals now can help you both stay motivated to save and invest with a shared vision in mind.
Secure Your Future Together
Financial planning is an ongoing conversation, and it’s crucial to have these discussions early and often in your relationship. The key is to communicate openly and ensure you both feel heard and valued when making decisions.
With the right mindset and shared goals, you and your partner can build a solid financial foundation that will support your future together.
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