As a wise man once said, “I don't know what they want from me. It's like the more money we come across, the more problems we see.”i
If this rings true for you, chances are your most important relationships are marred by conflicts about money. It’s not something you want to deal with at any stage of life. When you’ve worked hard to build your wealth, you want it to engender comfort and security – not tension and fighting.
Cash is first on the agenda
It’s a common theme in any divorce story. Aggrieved former spouses make dramatic statements about “taking them for all they’ve got” or “making them pay”. Couples on the verge of a split often ‘lawyer up’ and call their accountant before they contact a counsellor, psychologist or emotional confidante.
The same goes for when a loved one passes away. Official government stats suggest that around half of all Aussies die without a valid will. Ambiguity and poor drafting can lead to confusion and subjectivity, which leads to conflict. Bereaved family members, who are already vulnerable and grieving, take their emotions out on their relatives in the form of aggression and stubbornness over the estate.
Dirty little financial secrets
According to a 2014 survey by American Express, 40% of women and 33% of men have hidden purchases from their partners.
Closer to home, back in December last year an ME Bank surveyii found similar results. Around 6% of Aussies keep a bank account or loan secret from their partner. And high earners are the worst offenders – nearly a quarter of all those earning over $200,000 a year have a secret savings account.
If you’re tired of debates and secret-keeping, you’re not alone. But you don’t have to keep rehashing the same old arguments.
Take a few deep breaths before you react
- If something traumatic has happened, chances are you won’t be in a great frame of mind to make an important financial decision. Give yourself a bit of breathing space after an accident, argument, or death in the family. And make sure everyone else involved agrees to do the same.
Understand your money management personality
- Are you a spender or a saver? It’s important to understand your own attitude towards money, and how that affects your discussions and behaviour towards others. For example, if you’re worried about a family member’s seemingly frivolous spending habits, be conscious of your own biases.
Ensure you have a valid will
- Unfortunately, many free templates and will kits aren’t enforceable under Australian law. For your peace of mind, and your family’s future, we can collaborate with your solicitor to help you make sure you’ve got all the assets in your estate covered and accounted for.
Use both names – on your assets and your debts
- Putting savings accounts, investment portfolios and other assets in both names can be more conducive to cooperating on the management of those assets. Nobody gets to say “I’m the boss of that” or “that’s not my problem”.
Putting both your names on utility bills and mortgages means you’re mutually obligated to cooperate on working out how to meet your responsibilities.
When it comes to wider family wealth, such as a family business, make sure the asset is structured so that responsibilities (and benefits) are clear. For example, make sure you formalise the way profits from that family business are distributed between family members.
Make a budget – and stick to it
- Making a household budget, and personal budgets, is a task that too many people skip. Not having a written, agreed-upon budget can mean that people whose finances are tied together are not on the same page about how money is being spent. And that’s a recipe for conflict.
i Lyrics from ‘Mo’ Money, Mo’ Problems’ by Biggie Smalls