Planning
6 July, 2015 - 02:04 PM GMT

What about Money Compatibility?

When we talk about compatibility we usually focus on how well we get on socially. But what about money compatibility? It can really make or break a relationship!

A sad fact is that around 50% of marriages end in divorce and while money may not be solely to blame, you can be pretty sure that a misalignment of values, priorities, expectations and attitudes to money will have something to do with it. Financial Adviser, Christine Hornery of Financial Management Solutions on the Central Coast of New South Wales shares this story.

I recently met a young family who were clearly in trouble. In fact, they had hit rock bottom. Mum and Dad were living apart and one of their three children had been diagnosed with a learning disability and they weren’t sure how to help him.

 They had a mortgage, credit cards and a car loan but from the outside, what looked like a nice lifestyle. The truth however was very different. They were financially drowning.  

Conversations quickly escalated into arguments, blame and tears and I wondered what these two adults could possibly have in common other than their children. Despite being invited, I felt like an intruder and really uncomfortable. And I wondered how things had come to this? How had they moved from being in love and deciding to have a family to not being able to have a civil conversation?

I was also thinking, what am I doing here? I’m a financial adviser not a counsellor! So I thought, Ok. I’m a professional and I’ll do what I can to at least get some clarity around what’s going on with their finances and try to understand their priorities and why they wanted to see me..

As their story unfolded I could see that they had a number of issues that compounded to overwhelm them. And while they used different words, they both felt they’d failed and their hopes and dreams were lost. They felt they had no financial certainty and their lives were out of control. 

Interestingly however, they both said they wanted the same things but had no idea of how to change their situation and get what they wanted. Rather than pulling together as they faced challenges, they pulled apart and blamed each other for their circumstances. 

When you have a young family and are laddered with financial commitments, it’s easy to feel out of control and loose sight of what’s going on and what you have together. 

The question I struggle with is how you can ever feel successful without goals and a plan. If you have no yardstick to measure how you’re tracking to your personal goals, it’s pretty easy to fall into the ugly trap of “keeping up with “the Jones”, which of course is a no-win situation. So how do we give ourselves the freedom to choose the life we want to live and measure ourselves against nothing other than our own personal plan? It takes bravery.

So here’s four tips from a woman who has been there:

  1. Talk about your attitudes to money from early on in your relationship. It’s a taboo topic that’s easy to avoid when you’re enjoying going out and having fun. Just because you are attracted to someone and are compatible socially, doesn’t mean you are compatible when it comes to money and that could mean your values and vision for the future is not aligned. 
  2. Don’t forget to talk about spending, saving, holidays, children’s education, career and the kind of lifestyle you imagine. 
  3. Make a budget and monitor it regularly. It’s much easier to recover from a month off track than it is a decade. It’s amazing how people spend more than they earn but have no idea they are doing it as they swipe their credit card!
  4. Make time to connect with each other. Try to have a regular date night and promise not to talk about the kids. It can be a challenge!

P.S. After working with our couple to break the issues down into manageable pieces, I was able to recommend strategies to restructure their finances. This gave them a clear path so they could see how to get ahead.  But the real difference came in creating a plan they could commit to and the financial certainty it gave them. They are now having a go at mending their relationship.

Christine Hornery is a licensed financial adviser at Financial Management Solutions Pty Limited  ABN 49 104 906 309 trading as FMS Group, an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited Australian Financial Services Licencee and Australian Credit Licencee.

For more information 

http://fmsgroup.com.au

General Advice Disclaimer: Information in this article is of general nature only and is not intended as personal advice. It does not take into account your particular objectives or financial situation and needs.