Most relationships have their deal breakers. For women, handing over financial control to a partner who “might” know more about money should be one of them.
“Being in the dark about your finances is one of the most disempowering positions a woman can find herself in,” says TBA Law solicitor Jacqueline Brauman.
But often this is the case for many women, either by choice or circumstance.
Global studies show that women tend to be less financially educated than men, and this is largely due to men earning more on average.
Both are facts that, in addition to women having shorter working lives but longer life expectancy, put them at greater risk of poverty and financial abuse.
Research also suggests that women are more willing than men to hand over financial decisions to a higher-earning and therefore “more educated” partner, according to a US survey by personal finance company CreditLoan.com.
But in an age where economic equality is increasingly sought after, women are being urged to think and talk differently about money in relationships.
“When you first fall in love, money is not a topic of importance,” says Obu Ramaraj who is the author of upcoming book Women and Money Mindset.
“But that same money can cause so much stress in relationships, regardless of whether you are married or not, so it’s good to talk openly and without judgment.”
An estimated 51 per cent of couples say financial stress is what causes them to argue some or a lot of the time about money, according to a survey by comparison website Finder Australia.
Interestingly new research commissioned by Gateway Bank also found that when it comes to love and money, 44 per cent of all Aussies seem to believe that they are better at managing their money than their partner.
While you’re probably not going to be able to avoid the odd squabble over money, here are five “relationship makers” that may mitigate arguments, and can help you feel more financially empowered.
- Talk openly about your individual financial positions
- Understand each other’s values, attitudes and financial goals, particularly whether they are aligned
- Identify how financially literate you both are, and areas where further education may be needed.
- Talk about the management of joint finances. Discuss who will manage this, and ensure full disclosure.
- Talk about kids. Do you want them? Do you know the financial impact and how you might want to manage this?
Relationship deal breakers are things that most of us have in some form, and finance is an area where there are plenty. Here’s what to be wary of.
- Handing over financial control in blind faith. While it’s fairly typical for one partner in a relationship to take the reins of the finances, there needs to be clear communication and complete transparency about the finances for the other person in the relationship.
- Sexually transmitted debt is real. This is something that women tend to contract more than men. It either arises because debt is not disclosed at the start of the relationship, or because one person has taken control of the finances and has accumulated debt that the partner doesn’t know about.
- Giving up on your own financial dreams. If you have your own financial goals for saving but your spouse does not share these, keep control of that in a separate account rather than giving up altogether.
- Signing documents without reading them first. Don’t unknowingly get yourself into debt, sign any guarantees or sign security documents without knowing what it means.
- Ignoring your rights. You are entitled to independent advice, and if your partner gets upset with that, perhaps you need to explain that you are trying to educate and protect yourself. Indeed if your partner gets really upset, perhaps there are deeper trust issues or he or she is trying to hide something from you that requires further investigation.
Brauman says ultimately there’s no right or wrong way for people in a relationship to manage their finances but, like most things, there shouldn’t be secrets.
“You can have individual or joint accounts, or a combination of both. But don’t hide money, or debt,” she adds.
Also, just remember that if you do divorce or separate, full disclosure of every asset and liability needs to be made, so it will come out later if not earlier.
She adds that starting a relationship with a talk about pre-nuptial agreements may not be useful for young people but it could be important for high net worth, previously married individuals and older financially established couples.
This Financy article was first provided to the Australian Financial Review. It has been republished here with permission.