Top 5 money mistakes
HOW COUPLES CAN AVOID BEING TORN APART BY BAD FINANCIAL HABITS
SECRECY, competing priorities and poor habits can quickly implode relationships if the five most damaging money mistakes are ignored, experts say. Financial stresses are the second biggest cause of divorce behind infidelity, says money coach Karen Eley. It changes the power dynamic if everything is left to one person when it should be two people working towards the same cash and investment goals.
“While a couple has a relationship with each other, they also have their own unique relationship with money,” she says.
Whether it’s day-to-day financial matters or long-term investing, understanding the critical money mistakes couples make – and how to avoid them – will help build a stronger relationship.
WATCH OUT FOR THESE 1 FIVE ERRORS AVOIDING MONEY TALK
“Transparency is key,” says Eley. “Set yourself a time frame for airing your financial confession, or have regular monthly money checkins so both parties know what’s going on.”
Eley recommends both partners have an active role – even if only small – in managing money. Come clean about debt and past errors. Are you a spender or a saver?
2 OVER THE TOP BUDGET
Excessive rules about spending and restrictive household budgets are dangerous, especially if one partner doesn’t buy in, Eley says.
“Each partner should have some discretionary funds that they can have complete autonomy on how it’s spent,” she says.
3 RESENTMENT
“I see this often with couples,” Eley says. Control, power dynamics and resentment can surface when one partner earns significantly more than the other. “Then conversely the other partner often has guilt, shame and avoidance – they don’t play well together.”
4 RISKS DON’T FIT
More couples are investing together, which unites them towards a common goal but only if there’s good communication.
Online investment service Stockspot had a 100 per cent rise in people opening joint investment accounts in 2020, particularly among younger couples, but chief executive Chris Brycki says mismatched tolerance to risk can be a problem.
“One person may not be comfortable with the inevitable ups and downs of a high-risk investment portfolio, but may end up saying yes to please their partner,” he says. “This could result in arguments as the share market moves up and down.”
5 LETTING EMOTIONS TAKE OVER
Brycki says even experienced investors can get emotional. “If you have a third party managing your investments, the hands-off element will allow you to be less involved in market ups and downs,” he says.
Emotions are often intense early in relationships, so for some it may be premature to start investing together quickly.
“If you don’t have an agreement in place, then you might be facing a bit of messiness to split your investments if your relationship goes south,” Brycki says.
Childhood sweethearts Rebecca and Graham Matthews have been a couple for more than 23 years, and also work together running their life coaching, nutrition and personal training business The Mind & Body Co.
Rebecca says she and Graham recently completed a program to discover their money personalities after finding their approaches to money differed.
“We had assumed we were still aligned and what we were working for was still the same, but we had individually evolved,” she says.
“When you have been together for so long you assume you know what the other person is thinking.” Now they no longer assume. They discuss.
“We have got back to talking at a more granular level and spending more time having those conversations,” she says.