As I’ve written about in the first two articles in this series, it is wise to proceed cautiously when mixing money and love.
If after considering these five factors you’ve decided to join finances then the smart way is to pace yourself.
Joining finances prematurely or too quickly can undermine the health of your relationship by masking bad habits before they’ve been addressed.
1. Don’t repay their debt
For example, it can be tempting for a partner who is a good saver to repay their partner’s lifestyle debt, thereby saving interest.
That’ll deny them the critical opportunity of learning how to control their own spending, which is essential in avoiding future fights about money.
2. Don’t guarantee their loan
Along similar lines do not guarantor a partner’s loan until you’re married or long-term committed to each other. Desire for something you can’t yet afford is a good motivator for learning healthier behaviours.
Plus, if the relationship turns sour your former love could leave you saddled with the repayments. This is known as catching a ‘sexually transmitted debt’ (STD) and could trash your credit record.
3. Shacking up may cost you rather than save you
Whilst moving in together can seem like a smart way to save money it can be a dangerous decision.
Couples need to be aware that though you may not have fully joined your finances the law may see it differently in the event of a nasty break-up or premature death.
3.1 Match your Will to your wishes
Many people forget they have default life insurance in superannuation, sometimes in the hundreds of thousands of dollars. If you prematurely pass away your de facto partner may be eligible to receive it all.
To prevent that happening ensure you complete a beneficiary nomination in your superannuation and have a properly executed Will.
3.2 Mine could become ours
If you’ve been living together long enough to be considered de facto under family law, then a nasty break-up could see your former partner claiming some of your hard-earned assets.
This is a complex area so when there’s a significant difference in income, assets or money habits it pays to not rush into living together.
If you’re concerned, then consult a family lawyer to learn about your options. The few hundred dollars will be money well spent.