Thinking of combining finances with a partner?
While love and trust are central to everything, it pays to take a practical approach to shared finances to make sure everyone is on the same page from day one. In this article, we cover:
How to talk to your partner about money.
The earlier, the better.
It’s never too soon to have the ‘money talk’ with your partner. Initiating open and honest discussions about finances early in your relationship can help you better understand each other’s attitudes, experiences, and background in managing money.
What does healthy communication around money look like?
- Respect for each other’s thoughts, feelings, and values
- Shared decision making and setting goals together
- Focused on solutions (no pointing fingers, blame or criticism).
If you feel unheard during money conversations or are concerned your partner is trying to control your money and prioritise their individual goals, it may be a sign of financial abuse.
Important questions to ask before you start sharing finances.
1. Why should we share money?
The most important question of all! Choosing to combine finances in a relationship is a choice, not an essential. You should never feel pressured to take this step in a relationship – both parties should be comfortable with the decision and have an equal voice in the discussion.
2. What is the right structure for us?
There is no one-size-fits-all approach for combining finances. You could choose to pool both of your incomes together and budget everything from there, or perhaps your version of sharing money just the both of you agreeing to deposit a percentage of your pay into a joint savings or transaction account, keeping the rest for yourself. Regardless of what you decide to do, it’s always a good idea to keep a separate bank account with a safety net of your own money for ‘just in case’.
3. Where are we both sitting financially?
It's likely you both have different financial situations, with varying incomes, assets, and debts. To gain a clear picture of your combined financial standing, make a list of your:
- income
- regular expenses
- assets, including your house and car
- super and investments
- debts and loans.
Our Living Expenses Calculator can help you work out your weekly, monthly, and annual spending.
4. What are our shared goals and how will we achieve them?
Agree on your short- and long-term goals, both in your relationship and financially. We recommend using the SMART method of goal setting:
- Specific – Your goal should be clearly defined. e.g. we will save for a deposit on a house
- Measurable – Make your goal easily quantifiable so it’s easy to track your progress and identify when you’ve reached the finish line. e.g. We will save an $40,000
- Achievable – Check that the goal is realistic to your lifestyle and budget. e.g. We can each comfortably contribute $200 a week to our joint savings account
- Relevant – Ask if the goal you’ve set is relevant to your wants and needs as a couple. e.g. Yes, owning a property together is something that is important to both of us
- Time bound – Agree on a deadline. e.g. If we both contribute $200 a week to the savings account, we should hit our goal in 24 months (or maybe sooner with a savings account).
If you plan to buy a house, get married, or have children, think about how you’ll save for these significant milestones. In some cases, you might agree to cut back on or combine some expenses (i.e. cancel or combine subscription services, reduce takeaway meals) and work to reduce debts before you start saving.
5. What will our household budget be?
Creating a budget together is a great activity to do with your partner when moving in or purchasing a property together. While it might not sound very romantic, it could just be the most rewarding date night you ever schedule.
Tools and calculators to help you manage your shared finances.
Tips for managing shared finances.
Decide how your payments will be made.
Take some time to discuss how shared expenses, such as utilities, insurance, etc., are to be paid. Decide if each expense will be the responsibility of an individual or if they will come from joint funds. Also, consider whether you want to add both of your names to utility services like electricity, gas, water, and internet.
Set up a joint bank account.
A joint account can be any type of account, including transactional, savings, or term deposit, that you and your partner have shared access to. The type of account you choose will depend on what your shared needs are and how you want to use the account. Remember: agreeing to open a joint account does not need to be at the sacrifice of your own individual account.
Understanding the risks and benefits of a joint account
Review your finances regularly.
Set up regular check-ins with your partner to review your finances together. Talk about what’s working, what could be improved, and whether you’re on track to meet your goals. Financial situations fluctuate – the current cost of living crisis is a great example of this – so having a designated time and place to chat about money will help you address small issues before they become big ones.
Striking the right balance: How much to spend and save
Shared loans.
If you need to borrow money, it's important to consider what getting a loan in both your names means. You should be aware that when you enter a joint loan arrangement:
- you are both responsible for repaying the debt
- if one of you does not or can no longer pay, the other person is still responsible for the full amount
- you will both own the portion that's been paid off.
You should be cautious about putting your name or going guarantor on a loan that is solely for your partner, like borrowing money for their business. If things go wrong, you are putting yourself at risk of being responsible for repaying the debt.
Consider a financial agreement or prenup.
If you have financial assets you want to protect, such as property or super, it could be worth setting up a binding financial agreement (commonly called a prenup). This document will set out:
- how you and your partner’s assets and money would be divided if your relationship ends
- whether you or your partner get any ongoing financial support post break-up.
Other things to consider.
If you’ve trialled sharing finances with your partner and it’s been a good experience, you might want to consider the following.
- Making a will or updating an existing one to include your partner as a beneficiary
- Combining insurance policies, for example couples health insurance or life insurance
- Updating your super to include your partner as a beneficiary or even looking into how you can grow your super together
- Checking with Centrelink to see if being in a relationship (either de facto or married) impacts any payments or benefits you receive
- Checking whether you need to make any changes with your tax return. For example, Medicare levy, offsets and other declarations or entitlements. This article from the Australian Tax Office (ATO) answers some common questions.
Don’t feel equal in the money conversation?
- If you're uncomfortable with the way your partner controls your money as a couple, it may be a sign of financial abuse
- Financial abuse is when someone takes away your access to money, manipulates your financial decisions, or uses your money, property, or assets without your knowledge or consent
- If you are unsure if you are experiencing financial abuse, we still encourage you to give us a call. We can help you better understand the situation you are in.
Keep reading.
How to create a budget
Having a budget can help you stay ahead of your bills, save for a future goal, or weather unexpected events.
Keep reading
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