How to money-proof your relationship

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The traditional wedding vows include a promise to be together "for richer, for poorer", but many couples find "for poorer" just too bloody hard.

In fact, financial stress is the No.1 cause of relationship breakdown, according to Relationships Australia research. That's for all couples, not just those who are married.

If that's true, then it could be a rocky road ahead for many couples, given that financial stress is rising.

I reported last week that nearly one in three Australians was experiencing financial stress, and it was affecting people at all income levels.

This is partly because of housing affordability - people are servicing huge mortgages, or they're locked out and paying ever-increasing levels of rent.

It's partly because of low wages growth, with workers' pay packets failing to keep pace with productivity gains in the economy.

It's also because while the inflation rate has been low for some time, costs associated with raising a family keep going up. Childcare fees, premiums for private health insurance, and private school fees have all risen faster than the consumer price index.

Tough call

Now, you might point out that some of this is the result of choices, and you'd be right. No one is forced to send their kids to private school, for example. But this is about stress, avoidable or not. Two out of five high school children do attend private school and having made that decision, it would be a tough call to pull them out.

And finally, there's no doubt that consumerism is a factor. The only way to get ahead in a capitalist economy is to resist the siren call of whatever the capitalists are trying to sell you. But it ain't easy. The clarion call of our society is "spend, spend, spend", then you get smug commentators blaming you when you do and beating the drum of personal responsibility. It's a bit like the obesity epidemic - you're urged to eat at every turn, but it's your fault when you get fat.

There's some suggestion from the economic boffins that wages could start to grow, but there's also talk of rising interest rates, so I wouldn't bet on the pressure letting up any time soon.

If we don't play our cards right, our relationships could pay the price - and that brings its own form of misery, as well as being financially costly if you wind up in divorce or separation. In 2011, financial stress was cited as a factor in more than one in four break-ups, just ahead of communication difficulties. That's according to Relationships Australia's survey of more than 1200 people, who were asked about their own break-ups and those of other couples they knew.

In 2008, at the height of the global financial crisis, the same study found financial stress was even more prominent, contributing to one in three relationship break-ups. And communication difficulties were a factor in a whopping 37 per cent of break-ups.

I was asked to speak on ABC Radio National's Life Matters program about couple finance recently, and specifically how to deal with the situation of the two partners not being on the same page about money.

Different routes

You could obviously start by sorting out your finances, tightening your belt or getting a financial plan, whether through professional advice or more of a DIY route guided by technology.

But I think it goes deeper than the financial fix.

The doyen of Russian literature, Leo Tolstoy, famously wrote, in the opening line of Anna Karenina, that "happy families are all alike; every unhappy family is unhappy in its own way".

When it comes to money, it doesn't mean that every happy family has exactly the same amount or spends it the same way; it means every happy family has found a way of dealing with money that works for them.

Some couples try to avoid conflict by having one partner manage the finances. This can be a trap, not just because the outcome of financial decisions affects both partners but also because you may find yourself in the financial driving seat at some point because of separation, illness or death.

Fortunately this is changing. A study by National Australia Bank in late 2015 suggested that younger couples are more likely to be equal decision-makers when it comes to money.

It's not about whether you have a joint account or separate accounts, though I think it's fairest to share money if the couple have children together and one partner has left or cut back on paid work to look after them. Also if you have a mortgage and you're not putting nearly all your pay into an offset account, you're missing a trick.

Pre-nup agreements

Remember that even if you keep your finances separate, it's all one pot for legal purposes after you're married, have a child together or have lived together for two years.

If you have an important reason to keep things separate, then get a financial agreement, known colloquially as a pre-nup. It has legal standing and, more importantly, will force you to talk through various scenarios while you still love each other. And make sure you have a will, especially if there are children or offspring from previous relationships.

I believe the money secret of successful couples is about working together for a shared future. If you share the same values and money habits it's easy. If you and your partner have very different attitudes to money, then you'll have to work a bit harder.

The key is agreeing on shared goals and sticking to them. You might not have the same values about money, but hopefully you have the same values about honesty and following through on commitments. If you don't, you may have bigger problems.

Just make sure your goals and commitments are realistic - if the plan is too strict, it's human nature to rebel. You've got to live and let live a little too.

Caitlin Fitzsimmons is the editor of Money and a regular columnist. Find her on Facebook or Twitter.

This story How to money-proof your relationship first appeared on The Sydney Morning Herald.