I thought today I might talk to you about that evil thing called money. In my book ‘Define Your Inner Diva’ I have a whole chapter dedicated to finances, and one of the big things I like to talk about is what happens financially when you go into a new relationship. A lot of what happens with women, is that if we have a hard-fought battle in the family court or something similar, you feel like you have lost a lot of security in your finances. This can lead to us ladies going into a new relationship with a fear that it’s going to happen again, because we have just been through that hard fought battle and we’re scared of it happening again.
This fear can lead to women feeling awkward about talking about financial agreements to protect ourselves going into a new relationship. This can also stem from feelings of guilt about new relationships and the expectation that “it shouldn’t be a problem because we love each other and it should get itself sorted”.
Despite this fear and guilt, there are a few good reasons why we should agree with our new partner on a financial agreement when you’re going into a new relationship, especially if you have children. If you have children from a previous relationship, it is an important step to ensure that if the relationship breaks down, you will still be able to provide for your family as you need.
If you are going into the relationship with grown-up children or no children at all, it is still a good idea to discuss a financial agreement with your new partner. Usually this is relevant to people in the 40-55 age category, so a concern for you may not be providing for your children, but a bigger concern would be in what happens with your finances should something happen to you.
At the end of the day, it doesn’t matter if the relationship is new, long term or you are married, but it is important to cover off the things that will cause your partner grief should (god forbid) something happen to you.
This is why I always say that when you’re going into a new relationship, what you need to make sure you do is cover off what might happen with your finances, in this unlikely event something happens to you, to prevent an entitlement going solely to your partner instead of your children.
For example, in your superannuation, there will be certain components that automatically go to your partner in the event something happens to you, and you can’t allocate then somewhere else. Often in this scenario, its better to just let that happen and have it go to your partner because they are more likely to get more value from that than your children.
Then what you want to do is make sure you can cover off (usually through an insurance policy) what goes to your children. I usually advise that a good way to measure what this should be, is that you work out about what your super is and you match that and then say this insurance policy will go only to my children, and superannuation can go to my partner.
For these reasons, I have taken separate insurance cover to allow me to give this money to my children. A very common thing to happen in a second marriage for example, is that the will says the partner has the right to stay in the family home and the children have to wait until the other party of the couple passes away before they are able to access the house. This is a large contributor to angst amongst some families when it comes to estates and wills following the death of a parent or close family member. Commonly, everyone has their own feelings and opinions about who should get what.
It is a horrible thing to have to think about ourselves in terms of dollars and cents, but in reality it is just easier to manage the emotional upheaval a little better by making sure we have sorted our financial issues out ourselves, before we pass on.