Skip to main content
Family Law

Financial tips for newlyweds

By July 27, 2017No Comments

By Gianna Huesch

One of the most common reasons for divorce is often reported as “too much arguing”, and one of the biggest sources of disagreement and stress within a marriage is money.  A divorce might not always be about an affair, but it sure might be about “financial infidelity”—where one partner has been less than truthful about their income, spending, assets or debts.

With more couples marrying at an older age these days, there’s also more likelihood that newlyweds are combining well-established households and finances, which can greatly complicate things. So here are some financial tips for newlyweds that we have found useful.

The bottom line is that honesty needs to be at the foundation of any relationship, so financial counsellors stress the need to discuss financial goals and disclose financial circumstances and habits with your new partner, if you didn’t do so before getting hitched.

The aim is to agree on financial goals, short term and long term, and understand each other’s “financial personalities”, without judgment. This means revealing all facts about incomes, spending habits, debts and credit ratings, and calculating your combined net worth to create a snapshot of where you stand financially as a couple. This will help you work out your goals as a couple, which the experts suggest you divide into three sets of goals: creation of an emergency fund, one to five year goals (such as towards a holiday or large purchases), and long-term goals (such as regarding the children’s education or retirement plans).

Deciding how to manage your bank accounts will be an important consideration. Will you keep your finances fully separate or partially separate, perhaps with one shared account for joint expenses you will both contribute to? Keeping finances separate tends to be more common with second marriages or older couples, or when one partner has more debt or a bad credit rating, or if you have distinctly different spending habits. Often, parties will share practical expenses but maintain separate ‘fun’ accounts, to avoid arguments over the choices they make over individual discretionary spending.

Financial counsellors recommend designating one person to pay bills and then having a weekly money meeting. This will ensure you stay on track with your financial goals and keep both parties aware of what’s happening financially. Other financial tips include setting a minimum threshold for discussing large purchases before incurring them and discussing a policy for dealing with friends or family in need of loans. The main thing is to ensure that all financial considerations should be evaluated as a team from this point onwards.

Another important thing for newlyweds to do is to update beneficiaries on documentation for wills and trusts, insurance policies and superannuation. If you want to nominate your spouse as an attorney under a Power of Attorney or executor/beneficiary under your Will or if you’re considering no including your spouse in those documents we would suggest that obtain expert advice on all the ramifications of doing so or not doing so.

At this time it’s also worth reviewing insurance coverage to avoid under coverage or lapses in coverage, and duplicate coverage. For example, home contents insurance should provide sufficient to cover your combined household’s goods.

Finally, if you don’t already have a pre-nuptial Binding Financial Agreement (BFA), you might consider drafting a post-nuptial one. BFAs dictate the division of assets in the event of divorce or separation and can be entered into at any time before, during or after a marriage or before or during a de facto relationship. These agreements are particularly useful if you have kids from a previous relationship, if you’re bringing in significant assets to the relationship, if you are likely to receive a big inheritance or if there is a big income disparity between you.  BFAs do need to be drafted carefully to ensure they comply with the obligations set out in the Family Law Act 1975, such as the requirement to prove that each party has received independent legal advice in relation to the BFA before signing.

Our favourite money-wise tip for anyone getting married? Consider putting marriage counselling vouchers on the wedding gift registry. As charity organisation Centacare says, counselling vouchers “might not seem like the most romantic gift, but could provide couples with vital tools to help their marriages be happy and long-lasting” (read more: http://www.adelaidenow.com.au/news/south-australia/premarriage-counselling-vouchers-should-be-on-every-brides-gift-registry-says-adelaide-catholic-charity-centacare/news-story/eb24928f24100235b08647320f8f6614).

If you would like assistance in creating a legal Binding Financial Agreement, please don’t hesitate to contact Cristina Huesch or one of our experienced solicitors here at Alliance Family Law on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance for a free first conference.

Author

Call Now Button