How to navigate finances with a new partner

Published on: November 10th, 2021

Finances can be a complex topic to raise with a new partner, particularly for those relationships that start in our 30s, 40s and beyond, when one or both parties may bring significant assets to the relationship. However, financial differences are a major contributor to relationship issues, so it’s important to consider how and when you will discuss money. Here are our tips for navigating finance in a new relationship.

Get on top of your own finances first

Financial independence is critical for your own wellbeing and having your finances in order before you enter into a serious relationship is a key step to achieving this. Clarifying your goals and setting a plan to achieve them will help you understand what you want out of your money and life more broadly, and put you in good stead to find a partner whose goals align.

Share your attitudes towards money early

Early in the relationship might not be the right time to be discussing finances in detail, but you can start by sharing your attitudes towards money and your long-term financial plans, for example, when you want to retire or what retirement looks like for you. These conversations can be quite light-hearted and future focused, but they can start to give you an idea about where you are on the same page and where you aren’t.

Be alert to scams

No one wants to enter a relationship with cynicism, but with romance scams costing Australians $37 million last year, it is important to be aware of the warning signs. Typically, a new partner wouldn’t ask for loans or financial gifts, even if they have a seemingly legitimate reason. If something doesn’t feel right, talk to a trusted person in your life or your Apt Adviser before taking action. If a request is legitimate, your partner should expect you to take due time to consider it. In fact, a negative response to any delay, or creating urgency can be danger signs.

Start transparent discussions well before milestones 

When it comes to making a joint financial decision, such as moving in together or saving together for a shared life goal, it’s critical that you both understand each other’s financial position. It’s important to enter these discussions diplomatically, and understand that not everyone is comfortable discussing money, so it can take more than one conversation.

Before taking on joint financial responsibilities, it’s important to clearly understand your partner’s inflows and expenses – most people underestimate how much they spend, so it’s important to have a thorough understanding.

It’s also critical to agree on how you will manage finances moving forward. You may choose to keep finances entirely separate and nominate items each is responsible for, you may combine part of your finances with an account for joint expenses, or go all-in together. Whatever option you choose, it’s critical to make sure you are contributing to the relationship while protecting yourself.

Keep an open mind, but don’t ignore red flags

When discussing money with a partner, the key is not to go in with a closed mindset, be defensive or go on a warpath. You are bringing your lives, and to some degree your finances, together so there will need to be some compromise.

In saying that, there are some behaviours that may be red flags, such as excessive spending and high debt levels – someone who buys all the latest high-end ‘toys’ on credit, for example. Other things to watch for could be someone with no emergency funds who lives payday to payday, or a partner with years of good employment income but no assets behind them. There may be valid reasons for these last two, so they don’t necessarily have to be deal-breakers, however, they do bear some more thought and planning to protect yourself before you consider bringing your finances together.

Get professional advice

It may not be romantic, but it is wise to get legal advice. Even if you keep your finances entirely separate, entering into a de facto relationship can leave you with additional financial responsibilities in the event of a breakdown.

A solicitor can help you understand your options and make sure you have made the best legal moves for you and your relationship. If there are children of previous relationships, each party’s assets can form their inheritance, so it’s important to safeguard it. This is not about depriving one party or the other, it’s about setting clear expectations and making sure agreements are enforceable, as emotions can run high when relationships break down.

Your financial adviser can also help you revisit your financial plans, estate planning and insurances when you commit to a serious relationship. They will help you understand any impact to your existing plans, make changes to keep your goals aligned with what’s important to you, and make sure you have the right insurances in place to protect yourself and your loved ones.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.