Changing circumstances

Portrait of smiling mid adult couple standing against house during sunset. Happy man and woman are in lawn at back yard. They are in casuals.

What should you be aware of financially before taking the next step with your partner? We explore different relationship events and their potential impact on you and your partner’s financial relationship. 

If you’re ready to take the next step with your partner, whether that’s moving in, retiring or even breaking up, it’s important to be aware of what it means financially for you and your partner. 

Pick a life event:

Starting a relationship

The start of an intimate relationship is a critical time to create mutual financial perspectives and have conversations about money.

Having these conversations early enables you to assess whether, based on the financial information shared you or your partner wants the relationship to proceed, and if it is to proceed, whether certain areas need further discussion.

Even before living together and sharing expenses, there are many opportunities for couples to think about and discuss issues relating to money. 

The beginning of a heterosexual relationship can also be a time where gender norms are established.  

Even though many young adults’ express a strong desire for equality these days, there is still often an expectation that first dates proceed in gender-typical ways, with men responsible for initiating, and paying.

Gender dynamics that play out at the beginning of a relationship can become the norm very quickly. 

If unequal, these dynamics can cause difficulty when it comes to engaging in discussions about critical financial issues further down the track, such as debt and spending patterns, which may have significant implications on your future. 

Even if one person is better with finances than the other, transparency is crucial for any healthy relationship, just as it is with a business partnership.

Getting ready to move in

Before moving in together, money may have only come up when deciding who’s paying for dinner or the movies.

Living together introduces a whole new range of shared expenses: rent, power, groceries, etc. 

This is a really critical time and a good opportunity for you to discuss finances and establish communication channels that can be developed over time.

During this time – conversations about budgeting, saving and how to set up bank accounts can be common. 

Regardless of how things are structured, it is important that both parties in a relationship know what is happening with their own money and any family money. 

It is easy for one partner to feel excluded or taken advantage of if there are hidden or unknown money matters occurring in the relationship. 

It is also important to know how each others finances have been set up and managed in case of emergencies. If something was to happen to one of you, it makes it easier for the other to take care of bills and expenses. 

Having children

Having children is a crucial time for communication and negotiation around roles, finances, and decision making processes.  

The decision to have children often results in one partner reducing their income due to a change in the hours they work or ceasing work altogether to care for the baby or infant. 

In heterosexual relationships, it is typically the women who takes on this role, and although men often take some time off work to care for the children as they get older – it still predominately women who are the unpaid carers for the longest periods. 

This can have a significant impact on the finances, and power dynamics within the relationship, especially if previously both partners earned roughly the same amount and contributed evenly to the household budget.

As well as a reduction in income for couples, having a child increases household expenses and can trigger dual pressure on family budgets. This is often the time where finances need reviewing for the family to remain financially healthy.

Communication can also become harder during this time, due to the lack of sleep, and ability to make time to spend together.

It is also the time many women feel that the change in their earning capacity makes them less able to be an equal partner in financial matter.

Blending families

A blended family is a family consisting of: a couple, any children they have had together, and any children from previous relationships. 

When one or both people already have a child, or children, from a previous relationship, or are a caregiver, there will be different family economic systems that need to be understood, especially if household incomes are not the same. 

To work through these differences and form a new family bond – effort, cooperation, and collaboration will be needed.

To understand how finance will play a role in the relationship, the ‘money talk’ is critical for any blended family conversation.

It is important to be cautious and clear about expectations upfront – talk early and often, and do not compare your situation with that of a ‘traditional’ family, as it will be different.

Depending on your previous family makeup, values, and relationship dynamics there could be a range of unexpected financial matters to discuss. 

These could include:

  •  Shared arrangements for the children
  • Pets 
  • Legal costs
  • Shared assets
  • Trusts  
  • Business
  • Pocket money for the child
  • Costs for schooling and other activities 
  • Saving arrangements for the children’s future milestones 
  • University
Shared arrangements for the children
Pets
Legal costs
Shared assets
Trusts
Business
Pocket money for the child or children
Costs for schooling and other activities
Saving arrangements for the children's future milestones
University
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The older a couple is, the more financial elements there may be to consider, due to built-up assets, estate planning, and the protection of wealth, especially as it gets harder to accumulate with age.

It can be useful to draft a mutual plan for merging your relationship and money. 

It is important to be on the same page and consistent with your financial decisions, particularly those that directly impact the children, as they may be resistant to change – especially if they don’t see its benefit.

Conversation starters for blended families

When having a conversation about blending a family, it is unlikely everything will be addressed the first time you talk, but it is important to get started.

Suggested conversation starters:

"I know we see things a little different with our kids, about pocket money and stuff, can we make some time to talk about how that might work when we move in together?"
"You know I have mentioned that some of my money is tied up with my ex – can we talk about how that will affect my finances?"
"Since we are going to be a big family with four children between us, can we make some time on Friday night to talk about how the finances will work?"
"I haven’t lived with a kid before, and I don’t really know what that will look like – I would be really interested to hear your thoughts?"
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  • I know we see things a little different with our kids, around pocket money and stuff, can we make some time to talk about how that might work when we move in together?
  • You know I have mentioned that some of my money is tied up with my ex – can we talk about how that will affect my finances?
  • Since we are going to be a big family with 4 children between us, can we make some time on Friday night to talk about how the finances will work?
  • I haven’t lived with a kid before, and I don’t really know what that will look like – I would be really interested to hear your thoughts?
  • Blending families can be scary and unknown territory for many couples; it may be helpful to consider some additional support for guidance, such as a relationship expert, counsellor, financial planner or legal consultant (see details for support below).

Blending families can be scary and unknown territory for many couples; it may be helpful to consider some additional support for guidance, such as a relationship expert, counsellor, financial planner or legal consultant.

Click here to find support

Planning for retirement

Starting to plan earlier rather than later will put you in a much better position to retire with the lifestyle you want. 

There are many factors to consider that will affect what retirement looks like. 

  • Are your financial decisions made together?
  • Are your accounts held jointly or remain separate?
  • How is your household money managed? 
  • What is the level of trust between you and your partner? 
  • Will you be involved in financial planning?
  • Are there any investments or savings? 
Are your financial decisions are made together?
Are your accounts held jointly or remain separate?
How is your household money managed?
What is the level of trust between you and your partner?
Will you be involved in financial planning?
Are there any investments or savings?
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Research suggests that in general, women play a less active role in retirement financial decisions than men. And younger women in relationships are the most disengaged individuals when it comes to couples planning for retirement.

Experience in paid and unpaid work determines economic security in later life, which again means women may be in a disadvantaged position – they are more likely to earn less money than men, take primary responsibility for unpaid caregiving and household chores, and have fragmented work histories.

This combination of factors can leave women in poor financial circumstances in later life, especially if they’ve been in a male-female relationship and money has been kept separate.

As a result, women experience higher rates of poverty than men in old age and are more reliant on the pension as their primary source of income. 

“We talked about spending and saving because there is a balance – it’s important to save but also enjoy life.”

Senior couple smiling

Ending a relationship

Financial difficulties and relationship breakdowns are closely related and complex. 

Financial difficulties can arise from a relationship breakdown and/or cause a relationship breakdown.

The level of hardship or financial vulnerability experienced by each partner when a relationship ends, is influenced by many factors.

These can include:

Personal values and beliefs that influenced how the family roles were set up
How money or debt was managed in the relationship
The level of each person’s involvement in the finances
Confidence around money
Savings
Gender
Socioeconomic background
Age
Employment history
Family investments
Expectations
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  • Personal values and beliefs that influenced how the family roles were set up
  • How money or debt was managed in the relationship 
  • The level of each person’s involvement in the finances
  • Confidence around money
  • Savings
  • Gender
  • Socioeconomic background
  • Age
  • Employment history
  • Family investments 
  • Expectations

Even when all these factors are considered, the financial impact of separation tends to be heavier for women than men in heterosexual couples.

In any relationship breakdown, the financial impact is usually worse for the person who becomes the main carer for the children. Single parents are recognised as among the most economically disadvantaged groups of people.

If you’re going through a break-up or divorce and you have shared accounts or children together, it is important that you know what your options are. 

© Good Shepherd NZ and AUT, 2021

Good Shepherd NZ has built this toolkit in collaboration with Dr Ayesha Scott of AUT’s Finance Department.