Don’t go breaking my heart… or my bank account

Monday, 22 December 2014

Lack of financial planning leaving Aussies broke and broken hearted

No-one wants to get an STD i.e. ‘Sexually Transmitted Debt’, but without the proper protection it can happen.

The findings of a recent ME Bank survey measuring attitudes toward finances in relationships showed almost half of Australians believe they would face serious financial consequences if their relationship turned sour, yet only two per cent have any financial contingency plan.  

When asked approximately 1 in 7 (14 per cent) of Australians said they had been or would be financially crippled (i.e. carry a level of debt or expenses that they couldn’t service on their own) by a relationship breakdown, with a further 29 per cent carrying a moderate amount of STD.

The worst hit demographic in the event of relationship splits are those in the 30-49 year age bracket, with 53 per cent reporting they did or would shoulder a moderate or crippling amount of STD. Furthermore, 43 per cent of all respondents who were married or living with a partner believed they’d experience similar financial distress.

Interestingly, the survey found the wealthier among us are most cautious about protecting their pennies - 9 per cent of people earning between $150,000 and $200,000 reported having a contingency plan in place, compared to 2 per cent overall.

ME Bank executive, Rebecca James, said we don’t plan to fail, but many of us do fail to plan for the ending of a marriage or relationship.

“It may not be pleasant, but is it worth exploring a financial contingency plan should good intentions turn sour?” James said.

“Broaching that discussion and seeking the advice of a lawyer early on can take the heat out of arguments over who gets what later on should the relationship not work out.” 

Can’t buy me love: Aussies closely guarding financial independence

While Aussie couples may be unprepared for a bust up, they’re actually quite reluctant to enter into money matrimony in the first place. Almost 1 in 5 people (16 per cent) are completely financially independent from their partner − maintaining entirely separate bank accounts − while 22 per cent use a mix of joint and individual bank accounts.

The survey also showed younger Australians are more likely to protect their financial independence: only 17 per cent of those aged 18-29 in the long-term relationships use joint bank accounts exclusively, compared to 46 per cent over the age of 50.

Overall, joint bank accounts are more common among older couples and higher income earners - 64 per cent of those earning $150- $200,000 have joint accounts compared to just 28 per cent of those earning $15,000-$20,000.

James believes this is a reflection of life stages as well as changing attitudes.

“It makes sense that the longer you’re in a relationship and the more jointly owned assets you have, the more likely you will pool your funds together,” she said.

“But times are also changing. Women in particular are more eager than in previous generations to protect their financial independence. More women are buying property in their own names, or they stand to inherit money and they or their parents don't want that to be shared.

“And younger people want to maintain a level of lifestyle freedom within the relationship – hence why we see a lot of couples electing for a mix of individual and joint accounts.”

Financial infidelities: putting your cards on the table

Besides being the most likely to crave financial independence, under 30s are also more likely to tell financial fibs about where their wallet has been. Money secrets kept by this age group included:

  • keeping a credit card without telling their partner (7 per cent);
  • taking out a bank loan without telling their partner (6 per cent);
  • keeping a secret transaction account (6 per cent);
  • keeping a secret savings account (6 per cent).

But it turns out high rollers are the most secretive of all: 23 per cent of those earning over $200,000 have kept a secret savings account from their partner.

“It’s just not lipstick-stained collars these days, there’s another kind of deception going on, and it can be just as hurtful as the sexual kind: financial infidelity,” said James.

“Modern age has made it a lot easier. Now that credit card and bank statements can be accessed online, it's possible to have a financial life that's virtually unseen by your significant other.

“If you're currently tangled up in a web of money lies, you need to fess up, and understand that your partner will feel betrayed and will need support.”

‘You bought what?’ − Money habits that get under our skin

According to the survey, money isn’t just an issue during a bust up; it could be a root cause of relationship cracks.

While 54 per cent of those surveyed didn’t have any issues with their partner’s spending, impulse buying, inadequate income and lack of commitment to joint financial futures were the leading causes of relationship conflict overall.

Impulse buying, shoe shopping and clothes shopping were the spending habits men found most irritating with their partners, while partying, gambling and inadequate income were the biggest gripes among women.

Ms James said identifying and addressing ‘unsavoury’ spending habits was a good step towards creating a relationship richer than your bank balance.

“Establishing what you think are fair budgets on non-essential items and developing a savings plan together is a good way to eliminate financial tension around these nagging habits,” she said.

“Set spending limits, such as ‘neither of us can spend over $100 from the joint account without consulting the other’, or establish a weekly ‘me-time allowance’ − an amount of money you're each free to blow on whatever you want, no questions asked.”


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