MONEY: how to avoid stressful family arguments over finances

Family tensions over finances are all too common, but they can be avoided. Our expert explains how.

Financial friction can arise easily within families, but proves dif cult to recover from. Be it a dispute over a will, or an argument about spending, money can be a “destructive force”, says Julia Newbould, coauthor of The Joy of Money.

And yet the happiness of our family is the leading family concern among under55s, ahead of the cost of education, bullying and maintaining a standard of living, according to The Real Concerns Index, commissioned by Real Insurance.

It’s impossible to be happy all the time, but we can minimise friction, particularly when it comes to money. Julia walks through key considerations when it comes to family nances.

Talk it out

Family nancial friction takes many different forms, but it often shares one common feature: “It comes down to communication,” says Julia.

If a parent or a spouse makes a nancial decision without explaining why, it’s easy for others to feel hurt. But these rifts are rarely actually about the money, says Julia. “It’s always something else.” Having an open and frank discussion about why nancial decisions are being made can avoid heartache, she says. If you’re entering a marriage, it is crucial to discuss

nances up front. Some people believe it’s important money is shared, while others maintain private accounts. Regardless of what’s right for you, the key ingredient is communication.

“The best models I’ve seen in relationships are when people have regular money catch-ups,” Julia says. “It’s really effective. Couples who have that in place often have strong relationships.”

Put it in writing

If you’re loaning money to a family member, putting the terms in writing may feel awkward, but it’s nothing compared to the awkwardness that might arise down the track.

If you give money to a child to help them buy a home and that child’s marriage breaks up, the loaned cash may go into a “pool” of marital assets, Julia says. If you haven’t been clear it’s a loan, it could be dif cult to recoup. “Be clear about your intentions.”

The same principles apply to estate planning. “It’s so important to make plans for the future,” Julia advises. “If one child becomes an executor and it’s not clearly written down it can create umbrage.”

Call for back-up

You should always seek professional advice before making any big nancial decisions that will impact others, Julia says. A professional will be able to walk you through the tax implications of your decision and help ensure you don’t inadvertently create inequity.

Julia gives the example of a parent who wants to divide property assets between children, but isn’t aware of the tax implications. A professional can help you avoid unintended consequences. “They counsel you before the event rather than trying to

x these delicate situations later.” AWW