Dealing with relationship financial stress

When relationships begin, go in with your eyes open, not just your heart…

Relationship financial stress is a leading cause of breakups, so it’s important to know where you both stand financially.

Talking about money may feel uncomfortable at first, but not discussing your finances could be much worse for your relationship later. It will also help you reach shared financial goals together.

Do you have different attitudes about money?

For your relationship to work, there isn’t necessarily a ‘right’ or ‘wrong’ way to manage money, but you do need to agree on how shared money might be spent, saved, invested or used to pay off debt.

Are you / your partner:

  • Good at saving, or living pay-to pay?
  • Conservative with money, or an impulsive spender?
  • Reluctant, or happy to lend/give money to others?

Poor budgeting and spending habits could cause financial and emotional hardship for one or both of you in the long run. A recent survey showed that 28% of the people surveyed had suffered financially because of their ex-partner.

Does one of you have more assets, savings or debt?

If so, legal protection may be worth considering – e.g. a pre-nuptial agreement, and/or Family Trust. Ideally a ‘prenup’ is signed before you are married or reach three years (in some cases less) in a de facto relationship. It is important though, that the agreement is legally enforceable

Relationship Debt

Ideally you and your partner would negotiate how you’ll share relationship debts, put this in writing and both sign it. Relationship debt includes any joint debts but even if your partner has personal debt in their name only, you could still be liable (and vice versa).

Learn more: Citizens Advice Bureau website

How will you manage household expenses?

Joint or separate bank accounts & cards?

Discuss whether to keep your money completely separate, or have a joint account for paying shared expenses and bills (e.g. rent/mortgage/utilities).

Will you have another joint account for non-essential spending, keep money for personal spending, or have money in separate bank accounts under your own names? Do you want a joint credit card or separate credit cards?

How will you divide household expenses?

Decide together how these will be divided up. Will you pay half each, or will it be based on income – if one of you earns more, are they happy to pay more?

Understanding Relationship Property

Will the Property (Relationships) Act 1976 apply?

Changes have been proposed to the PRA*, but at the time of writing this, if a relationship ends, relationship property (assets) are divided 50/50 or in some situations, according to the contributions of the partners to the relationship.

If you are married or a civil union couple, the PRA automatically applies, regardless of how long you have been in a relationship. It also applies to de facto relationships – in some circumstances, even if you were together for less than three years.

Learn more about the PRA: NZ Law Society (PDF)

What is Relationship Property? See Justice Department website

(*In April 2019, the Law Commission is making final recommendations to the Government about proposed changes to the PRA.)

Let your head rule your heart

Yes, enjoy being in a new relationship (who doesn’t love being in love!), but try not to let emotion cloud your financial decisions. If it looks like becoming a serious relationship, you and your partner will also need to commit to regularly setting goals together and discussing any financial issues.

Your better financial future starts here

Your better financial future starts with a conversation with one of our financial experts. We offer 30 minutes free consultations to help give you peace of mind that we can help you where you need it most.
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