Time for partners to have a ‘talk’ on finances

IF you have concerns about your partner’s attitude on joint finances, find out their long-term plan, says Scott Pape.

IF you have concerns about your partner’s attitude on joint finances, find out their long-term plan.

LYNDA ASKS: My partner and I are building a house, my first and his second. He made a $100,000 profit from his first house. The house we are currently building will cost $450,000. We have both saved up enough money for the 20 per cent deposit. However, we both keep separate bank accounts, and have only one shared account for the loan repayments. My partner is inclined to keep the $100,000 profit in his account for himself because he finds it unfair that I can’t match that amount. Should I be worried?

 

BAREFOOT REPLIES: Honey, he’s keeping his options open. That’s what’s happening. He hasn’t put a ring on your finger, so right now, financially, you’re like a friend with benefits. If you were my sister, I’d suggest that before you enter into a major financial transaction with this bloke you have “the talk”. Questions to ask him are: what’s your long-term plan? Are we buying the house as tenants in common, or in joint names? Should we have a cohabitation agreement? Are you planning on marrying me and having babies? That sort of stuff.

 

GET YOUR MOJO BACK

MARK SAYS: I am feeling a bit overwhelmed. My partner and I are both 30 and have a combined income of $140,000. We owe $690,000 on our home, which is worth $860,000. We also owe $350,000 on an investment which is worth $470,000. We owe $20,000 in personal loans, own both our cars and have about $20,000 in savings. We are getting married next year at a cost of $40,000 and then want a baby. Scott, I’m nervous. I’m worried about losing my partner’s income ($50k) and feel we could be in trouble. I feel we have done OK at our age, or am I dreaming?

 

BAREFOOT REPLIES: Mark, don’t tell me about your problems … tell your wife to be. Seriously, that’s at the heart of every good relationship — especially when it comes to finances — honest communication. Tell her you’re freaked out about how you’ll pay for everything — the marriage, the mortgage and the midgets. Then sit down together and work out how to tackle it as a team. Understand that there is no correlation to how much you spend on your wedding and how long it lasts. I got married three years ago, and it was one of the best (and scariest) days of my life. What made it awesome was the people, the music … and the booze. We had it in our backyard, with a mate as our photographer. We spent more than we thought (everyone does), but we paid for it in cash. So should you. The best thing you could do for your marriage is to build up to three months of Mojo as a financial backstop: $40,000 should do it ...

 

THERE’S NO PRINCESS

MATT ASKS: My wife and I are in a bit of a financial mess that we can’t seem to get on top of. With a $300k mortgage, a $15k car loan and $10k in credit card debt, I can’t see how we’ll ever get on top. I keep seeing the ads for MyBudget and I’m wondering if that’s the answer for us? What do you think? Worth a visit?

 

BAREFOOT REPLIES: Stop looking for fairy princesses waving magic financial wands. Managing your money is the old 80/20 rule: the biggest barrier to you getting on top of your money isn’t a lack of knowledge, it’s developing the necessary habits that will stop you spending money you don’t have, and valuing saving over stuff. If that doesn’t click, no amount of high-priced hand-holding from MyBudget or anyone else is going to help: they’ll just drive you deeper in debt with their fees.

OK, YOU GOT ME

JUSTIN SAYS: Your stuff is just plain common sense. How stupid do you think we are? Ringing the bank for an interest rate cut is hardly rocket science. There’s no magic secret, no code to crack. Congratulations on convincing us all that you had the secrets for so long — but I’m done now.

 

BAREFOOT REPLIES: After writing this column for over a decade, I’ve been waiting for this day to come. I knew that someone would catch on, and you my friend, have cracked my code. My advice doesn’t change. People ask me a million different questions, but I tell it straight — what works and what doesn’t. Still, I have tens of thousands of people who’ve followed my basic, commonsense advice who are now living wealthier and happier lives because of it. Maybe that’s my secret?

 

barefootinvestor.com

The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.

Originally published as Time for partners to have a ‘talk’ on finances