Financial issues in relationships

Foreign money where we show you how to pay your home loan off in up to half the time of a normal bank loan. Welcome to the Crown Money Podcast. I'm Jessie Edge and I'm joined by CEO and all round legend Scott Perry. How are you buddy?

Awesome, man, how are you?

Yeah, good, going really good. I've got a really interesting subject for you today. Wanted to kind of talk about the financial issues that can affect or ruin a relationship. And we've seen a lot of this. We absolutely have. So just want to kind of do.

Yeah, I mean there's, there's a few train smashes that we've seen a long time. I mean, I'm sure a lot of you guys out there have all heard of your friends or unfortunately some family members who have gone through this as well. It's never good, it's never easy. 50% of marriages are breaking up because of money. And so these are the top five derailers of these train wrecks. Lynn. So let's just kick off number one, where we at.

Financial infidelity. So this is, you know, infidelity in a relationship is cheating or lying. And financial infidelity is when you're lying about or not disclosing any of your kind of money decisions or debts that you may have and things like that. And this is, this is, you know, quite a big issue. It's all about that transparency and communication. You know, couple of key things in any relationship when it comes to money, it gets very complicated.

It's never good to lie full stop, let alone to your partner about money because they are huge trust factors. And once you break trust, I mean, we all know it's very difficult to get back to 100% trust. So if you are in a position where you feel like you're being lied to about money from your partner, I think it's just about sitting down and saying, okay, let's just put cards on the table. Off the record, no judgment where we at. Yeah. And just call them like on it, ping them right between the eyes and say, let's let them, this is your chance. Level with me and just be honest with me. And they got that sort of opportunity to then put their cards on the table. If they don't take that, then we've got some big, big issues. But if they do take that, don't attack them because they're vulnerable and very scared. Consequences which no doubt going to be pretty messy. You are on the other side of the fence and you are hiding something from your partner and you're not being true or transparent. And I've seen this where I've sat down with a husband and wife, then after the meeting, the wife's texting me or the husband's texting me, said, scott, I'm so, so embarrassed about this. I didn't want to tell you, but I've actually got another $20,000 credit card I didn't want to tell my partner about. Can you please help them?

It's crazy, isn't it? And that's the thing. It comes up if you have to go through a financial application, especially now with something called positive credit reporting. So when a bank has access to positive credit reporting, they can see all of your existing open liabilities. So they will see that $20,000 credit card. You cannot hide it. And we will need to disclose it on your application form and tell the lender about it. So it's just one of those things you can't hide.

It's not right to hide because look fair on your partner and you wouldn't like them to hide a 20,000 credit card from you. And so it's honesty is the best policy. And the truth does hurt, but will be forgiven if you are truthful. If you get caught and found out, that's where the huge issues are. Massive, massive issues in any relationship are based around trust. And the number one lose trust from your partner is to be hiding things financially from them. So please just level up and just be the bigger person and just come with the truth if you're on that side of the fence. But if you're on the other side of the fence and you feel like something's being hidden from you, ask that person between the eyes. Just off the record, level with me. This is your one chance. Because if I do, when I do find out about it, because I can find out from positive credit reporting, and you can get your partner to do a positive credit report and show you that positive credit report. Like, there's nowhere to hide in this digital.

It's just the whole thing about you've got to be in it together. Like, you know what I mean? Even if you do in a lot of relationships, they might split their finances and try to keep it separate as much as possible. And that's completely acceptable way to go. And I'm all for, especially women in a relationship having their own financial independence, but at the end of the day, you've got a lot of combined expenses. You got to have, you know, combined financial goals. And. And you're all going to be working towards the same thing. So Even if you do have your finances separate, still have that open communication, honesty and clarity in your relationship.

Yeah. But if it does get to that point where you are feeling that somebody's being hidden from you, you can ask your partner to take a financial lie detector test. Just do a credit report for your big fella wife next level.

Hopefully you don't have to go to.

That path for sure. But I just want to protect the people if they are feeling that being lied to, that there are ways to actually get the truth.

Yeah. And if you, and if you do have a hidden liability, you need to understand if you go through a home loan application, that liability will absolutely be revealed and it will absolutely impact your ability to service a loan and get approved for a loan. And I bet you anything your partner is going to be ten times more pissed off if they find out during that process rather than before. So just bite the bullet, have the tough conversation and sort it out together. That moves into our second issue. And this probably actually plays into the first issue a little bit. If one of the partners is being too controlling or judgmental about money.

There's something called financial abuse which not many people have sort of heard of, let alone know what it is. Financial abuse really stems from when you have a main income earner for example, and maybe a stay at home. I'm just going to run an example here where the husband earns all the money but then controls all the money and doesn't let the wife have any ability to feel as though she's justified to be able to spend any of the money on the family. And so this comes from a scarcity mentality or some, some unfortunately wives have got husbands who are scrooges or tight asses and they just feel so, so guilty for having to spend any money on the family. They never spend any money on themselves, they're just only about the family. But they're made to feel guilty for spending money on the family and always question what's this money and what's that transaction? And there's no trust there. And as a result that controlling and judgment just makes them feel so small and it really causes massive rifts in relationships.

Yeah, I think it's, you know, like you said, when you have, you know, a bit of a unbalanced income earning and I think there's an underappreciation for household duties and the amount of money that, you know, if you were to outsource that, if you had a cleaner, a nanny, you know, everything else again, how much that would cost you as A family, it's huge. And so it's about understanding that even though it's not an actual like income coming in, there is income being derived or saved from those duties. And so it's, you know, just because you may be the main breadwinner in the family doesn't mean you have control over the money. But I think that is, you know, going back on the woman as well. You know, the most terrifying thing I ever hear is when a woman says, oh, I have no idea how much my mortgage repayment is. I have no idea how much money we have. That's my, I just leave that all to my husband. It's like you've got to, you actually have to say, no, I have a right to know and I need to know what our financial situation is. You are as much a part of that as, as your partner, you should know.

I mean, your name's on that mortgage and you're on the hook for it. If it goes pear shaped, your credit will be impacted never. Nevertheless, if your house gets repossessed, I mean, that's going to impact you for five or seven years going forward. So to those domestic engineers out there, those women who are doing all the hard work and not getting enough of the love, you should be really, really on top of this and actually making sure you know what your name's being signed up for. You know, the repayments being made on time, you know how much the repayments are. But more importantly is actually having an amount that set it in the budget each and every week for you and to, for you to spend on you guilt free. So having to sort of, oh my God, I've got no money spent on this. Okay, John, or whatever your partner's name is, you tell me how much you think is fair for me to spend on me. Obviously everything's going towards the kids and running the household, but it's very, very important. You have a set amount of money each and every week for you to spend on you just to give you that peace of mind. That's guilt free spending.

Well, my husband and I do exactly that. We have shared finances, everything's combined together. We pay all our bills, mortgage, et cetera. But we have a set amount that goes into our own personal bank account, separate to all of accounts. Our partner can't see it, set them out every month. And we know that is our money to spend as we see fit, no questions asked. Whatever you want to spend it on, you can spend it on. And it's about having, yeah, that financial independence. It's Agreed upon. We've worked it out together and it's, you know, we're just comforted to know that, okay, that amount is for me to spend. I don't have to worry about it.

Yeah, critical now, not talking about your money. I'm not talking about your money regularly. And so regular is regular.

Great question. Like, is this a conversation you should be having yearly? Definitely not. I think it's something that's almost a monthly conversation in, you know, in a casual way, just a quick conversation. How are we going this month? How much should we paid off our mortgage this month? You know, is there any kind of issues financially we need to talk about then? I think you should be doing quarterly or half yearly reviews of all your bills and direct debits. So are we using the Netflix subscription? Are we using, you know, all those things? Are we paying our rates on time? Are we paying our bills on time? And then every six to 12 months, I think it's those really much bigger picture conversations around what are our financial goals, where we're going to be in a year's time, five years time, 10 years time, what does our retirement look like, what kind of things should we be putting in place now as we know, you know the beauty of compound interest. If you start investing now, start paying down debt now as a priority, you're going to smash it way more than you would in 10 years time. So I think, yeah, it's, it's, it needs to be just a regular part of your, your relationship. It shouldn't be something that you should be scared to talk about.

A really good way that a lot of our clients are run with is the seasonal check in. So at the end of summer, at start of the next month, you then want to sort of check in. So where are we at with our finances? Are we still on track to have the house paid off in 12 years? So everyone knows their debt free date that's tracked for you? Is our surplus cash flow growing or is it reducing? Everyone should be reducing this point in time because as rates go up, repayments are going up as well as your expense to go up with inflation. And just make sure you've still got buffers. What's our safety net? How much emergency funds do we have? These are key questions that you need to be making sure you're on top of every single season change. Summer, winter, autumn, spring. Where we are we moving forward. And that's the main thing. Stop competing against Mary next door or your sister. Just make sure you're in a better position. What you were last season. And as long as you're moving forward, progress equals happiness.

Absolutely. And my husband and I, we love to do the, you know, just before New Year's Eve, sit down together, have a bottle of wine and work out our goals for the year. And a big part of that is our financial goals design. Where do we want to head?

Just the bottom one.

All right. Number. Number four, refusing to compromise. So I think this comes down to the controlling aspect as well. And you need to understand that everyone's going to have their own needs and wants. If you are, your money is combined. You need to be on the same page, but be flexible as well and have a bit of a perspective of how your partner is feeling especially. And we see this so often when you have one partner as a spender and one partner as a saver and they're going to have completely different perspectives on their money and the way that they want to spend it. Um, and you need to kind of work into that a little bit, compromise with the other person. If your partner is a spender, make sure that they have that monthly or weekly amount going to their separate account so they can spend it guilt free. You know, we found that, you know, savers like to see their debt coming down, spenders like to see their savings account going up. It's just so really kind of think about money from your partner's perspective and try to understand them and compromise if needed.

Perfectly said. Number five, failing to set joint financial goals. I mean, takes two to tango, right? This is a team, it's a partnership. You need more than one person to sell a ship. And so somewhere in these financial goal setting, where you're doing it at the end of each season, or like Jess and husband are doing at the end of the year, setting what we want the path to follow over the next 12 months, it's very, very good that you're getting what an understanding of what your partner wants. Tell me what is important to you. And for different seasons of life, it could be manual. Let's just focus on getting the kids through school. Yeah, but we're in sort of, we're in, I, I call it maintenance my way, really. Just we're not making huge leaps forward because we've got so many outgoing expenses with kids and, and child care and all these sort of bits and pieces. But on the other side of the fence, he's. If you're in a position where you're wanting to actually say, pay for your house within 10 years, but your partner doesn't really mind and is Happy to pay off in 30 years. There's going to be a disconnect there.

Yeah.

And finding that happy medium. So, well, why do you want to pay off in 10 years? Well, because that means we've got all of our income towards lifestyle experiences, investments, we're free as young, saying, well, I'd much rather live a little more comfortably for 30 years and then paid off like every other man and his dog does. So finding out what's important to your partner and why. Why is it important to you that we do that? And then that's going to give you some justification as to whether or not that's a fit, that's going to let you sort of come to a middle ground and say, okay, well, in 10 years, why don't we try for 15 years at least the belt a little bit. We enjoy the journey a little bit more. We're still 15 years ahead of the curve, but we've actually had a little bit more sort of of a buffer to enjoy a few more holidays throughout the journey.

And I think, yeah, like, as we all understand, we live in the real world and all of those goals, all of our exciting kind of things that we want to achieve in our life, the foundation is always going to be money. Like, if it's like, oh, I'd love to take six months off and try with my side hustle, or I really want to, you know, pursue a creative kind of art or whatever it may be, it's like, okay, are we in a position to do that? Have we set ourselves up financially? If that's something you want to do in five years, well, we know any 20 grand by that time, let's say, for it. And all those things, it's just all of it is going to be found founded in money. So, yeah, got to have those conversations, got to be on the same page, got to be open about your communication, got to be understanding of your partner, got compromise. All things that are, you know, in any healthy relationship, they relate to money as well.

And celebrating your wins is one of the most important things as well. So bring closely a financial goal and say, okay, my mortgage at 435,000 at the moment, once we get it under 400 grand, then we're going to celebrate. And what. What o. What do we want to experience? What do we want to see? Where do we want to go? And it could be a trip with the family, could be. Whatever it may be makes you happy, but make sure that you are celebrating goals and wins along the way, because this is a serious marathon. And if you're wanting to get the finish line to celebrate, you're going to have a pretty miserable life. So making sure if we set a goal and there's a little checkpoint remorse along the way, we celebrate that win and then we've got something to look forward to in the short term.

Love it. Fantastic. Thanks so much, Scott. See you, buddy.