The Beginning of The Journey – Part 1
– Lynne Wilton
It is important to work out who is going to be the Administrator in your relationship. Be sure that it is the person’s natural ability and they enjoy doing the bookkeeping and paying the bills.
Your backgrounds will influence your thoughts around money. It is important to speak about finances from the very beginning. By understanding how things work, it will make creating a plan and managing your finances much easier. In the event that you suffer Loss or Separation, you will be able to take your financial plan to the next step and make a plan for the future.
In the case where you may earn less than your spouse, you may feel that you don’t have the same say in planning for finances; but this is not correct. Financial income is not the basis for a relationship imbalance, particularly if one of you is the care provider. It is important to talk about the issues and speak openly about your feelings.
Create your relationship goals and take stock of your income and expenses. Create a household budget and review it each year.
Even though you have an Administrator in the relationship, it is important that you understand the financial map of the relationship. This will help you to plan for the future and in the unfortunate event, should anything happen to either one of you, it is important to make sure that you have insurances and a will in place.
The best financial map is often an excel spreadsheet with various tabs to set out all your important information such as your mortgages, insurances, leases, expenses, investments and other important information. In the event that anything happens to either of you, make sure you have recorded in your financial map any information relating to funeral insurance that you may have, including policy numbers. Pretty much anything that forms part of your financial foundation, or requires payment either once a year or monthly, should be recorded in your financial map along with the corresponding account details, policy details or other important information; including passwords.
Remember when you are planning finances at the outset of your relationship, there are many areas that you can create economies; such as Life Insurance, Health Insurance and sharing other expenses. Many policies give bulk discounts if you both have your home, cars and health insurance with them. Also, superannuation can be of mutual benefit with tax offsets and administration fees including combining into a Self Managed Superannuation fund. These avenues should be explored with a professional to guide you.
It is really important to put both of your names on all of your utility bills, such as electricity, gas, phone, entertainment contracts and the like.
When it comes to investing in property or other investments, consider the risk. Particularly think twice about putting your name on a mortgage or loan document that may be in your spouse’s name. It is very easy to put a property 99% in one person’s name and 1% in the other, in the event that the mortgage is in both names being 50% each. Many an unhappy situation has arisen during divorce when a spouse is not in control of a property sale, but has the debt with the bank.
It’s important to understand how the system works outside of your home and then how you are going to manage that within the privacy of your household. The finance world is a complex configuration of relationships between individuals, households, businesses and governments; all of which come together at some point. If you look at how all of these relationships interact, all of these will affect you at some point and they all fall into the following categories;
Spending, Saving, Borrowing, Lending & Investing
If you think about these five categories above, they all fall into four key cogs that all work together to form the financial system of any country. Each cog interacts with one another to form the complete mechanics of the finance world. These are firstly the Regulators of the finance and financial institutions; secondly there are the Financial Institutions themselves; thirdly the various personnel involved and finally you and your household.