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Love and money: red flags you can’t afford to ignore

Valentine’s Day has come and gone for another year, but what if your relationship isn’t all roses and chocolate?

One in three Aussie marriages ends in divorce, which costs the economy $14 billion each year in government assistance payments and court expenses. Each time an individual divorces their assets shrink by 9% – and it takes an average of five years to recover from this setback.

Know your partner

Grace, 30, from New South Wales, had been with her partner for three years before they tied the knot. Looking back, she says there were many warning signs that should have alerted her to her husband’s money problems, which included a substantial debt and eventually credit card fraud.

About a year into the marriage her husband bought her flights to Vanuatu. When she got to the airport, Grace was horrified to discover that her tickets had been cancelled for suspected credit card fraud.

“I got to the airport and my booking was mysteriously cancelled,” she says. “I was viewed as a criminal. I had to buy a ticket for myself at the airport and [my husband] pretended like it was a credit card mix-up. He said he would look into it but he never did.”

Grace and her partner eventually divorced. But the financial turmoil didn’t end there. During their relationship, she had taken on about $30,000 in debt trying to escape their financial mess. After their separation, she had to pay it off on her own. She also discovered that he had been using her details to apply for loans, which had pushed her credit rating into the red.

Like Grace, many people overestimate how well they know their partner before they take the plunge, says Claire Mackay, from Quantum Financial. It’s one thing to know your spouse’s aspirations; it’s another to know their behaviour when it comes to money.

“You need to make the implicit explicit,” says Mackay. “Are they a natural spender or a natural saver? If you’re deciding to spend the rest of your life with this person, you should already have an idea of that.”

Part of getting to know your partner’s money philosophy is airing the dirty laundry. Mackay says it’s important to be upfront about income and debt, and decide if your money habits and goals align.

“If one person’s a spender and one’s a saver, at least acknowledge it,” Mackay says. “It’s about saying, ‘I’m not going to change – this is what I’m going to be like. So how do we as a couple optimise and maximise our strengths?’”

Pippa Elliott, from Momentum Planning, says open communication about money is not only important for your relationship but also your financial safety.

“It’s so important to take the love goggles off and have a really practical discussion about money because you love that person, not because you don’t love that person,” says Elliott. “If you’re in different positions and they’re not willing to have that conversation, it’s probably a red flag.”

Seek help early

As Grace found out, money problems can cause a lot more damage than a rift in the relationship. Thankfully, her story has a happy ending. With hard work and a little help, she managed to pay off her debts within two years. She’s also got a wonderful new partner and a thriving new business.

“My current partner assisted with a loan so I could reduce my bank debt,” says Grace. “I suffered a lot of anxiety and depression due to the marriage so I sought help from a clinical psychologist.”

Although her failed relationship eventually gave her the strength to overcome her problems, Grace says if she could go back she’d do some things differently.

“Looking back, I would ask more questions and not take ‘no’ or ‘I don’t know’ as an answer,” she says. “I would also not live outside my means and admit to family and friends that we were struggling. I chose to go to dinners, trips and concerts just to keep up appearances, when I knew that there was no way I could afford it. And finally I would ask for help! I didn’t ask for help, I took our financial situation on myself and it affected my mental health quite badly.”

How to protect your personal finances

  •  Keep both names on all accounts. It is important to have your own savings and credit record. Without this, if you divorce or your spouse dies, it will be difficult for you to get a loan or credit card.
  •  Be involved in household finances and make decisions together. If anything happens to one partner, and they are the designated bill payer, you should be able to take over.
  •  Don’t automatically opt for joint health insurance. iSelect has found there are no discounts to be gained by signing for a couples’ policy. If you require different levels of cover, such as optical for one spouse and physio for the other, separate policies will be more efficient.
  • Create a will and complete a binding death benefit nomination, which legally obligates the trustee of your super fund to pay your death benefit to the person/s you have nominated.

What type of spender or saver are you? Find out here.

Written by Steph Nash

Steph Nash

Steph joined Money as a staff writer in 2015. She has a bachelor's degree in journalism from UTS and is the former editor of North Shore magazine Sydney Observer. She has published work for Women's Fitness and Madison magazines.

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  1. “Each time an individual divorces their assets shrink by 9%”

    Wow, my friends must have very bad lawyers, they have lost upto 75%!

    You better have a goood job to recover from THAT in 9 years.

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