It’s no secret that the cost of living continues to impact Australians, with half of us struggling to meet our essential expenses.
So, how do you manage if you’re one of the 26 per cent who also live with a partner who overspends? We speak to Financial Advisor and Money spokesperson Helen Baker to get the download on money challenges in relationships and tackling overspending head on.
Why do you think 1 in 4 Aussies who are struggling to meet their expenses are also experiencing a partner who tends to overspend – does stress and spending go hand-in-hand in tough times?
It comes back to their values and often their upbringing. It is said that from seven years old we have our association with money formed in our minds. So, if we come from a background of struggle, we can often go crazy with money and overspend when we have it.
For some, when stressed or frustrated, retail therapy can be a kick that makes you feel better for a moment. But then you have to continue to find that hit. People respond to stress in different ways – eating, working out, and for some, it’s spending.
Can you talk about the age breakdown and what over spenders are tending to purchase between age brackets?
A lot of the older age group understand that tough times come – so they can be less likely to overspend than someone younger who is used to having higher incomes and easy credit, and low interest rates. Overs penders link back to values of what they didn’t have as children, what impresses others, or just what makes them happy – their purchases can range from jewellery and shiny things and fast cars, or it might be as simple as regular visits to Kmart!
How can we tackle the transition from low interest rates to needing to spend less, without feeling as though we’re missing out?
If you have an old budget, go back and revisit what you spent three years ago and compare – have you changed your lifestyle and that is where extra spend is coming from? Or, is it just purely the increase in costs? Try to work out what is really important to you and what is not important to you and reset your budget. I like to have three options – an absolute basic one to get by until things change, a medium one that is a reasonable way to live, and then the “living your best life” budget to live according to what is happening at the time.
How do you recommend couples tackle this kind of sensitive financial conversation, especially if the “blame” is falling on one party?
I think it’s about sitting down and playing a game of “would you prefer?” Would you prefer to spend more now, or pay more off the home? Buy that furniture, or a holiday? Would you prefer to spend now or have the choice to retire? Or to put kids through private school? It’s about getting on the same page.
Most couples will have a different approach to spending based on upbringing so discussing is good. You may like to bring in a financial coach or counsellor so neither of you is seen to be attacking the other – let the coach be the one to bring it together.
The main thing is to tie yourselves into a goal that makes you decide together to target something. You can also separate out an amount each that you both get to spend on unchecked, so people can spend on what they want as long as it still means they are managing their other money well.
When do you recommend opening a joint account?
I believe it depends on the duration of the relationship. At the start best to keep things separate. As time goes on, you may put money into a joint account and still keep some money separate. When you have been together a long time and you feel you share the same values you might tie it all in together.
Do you find there’s more of a tendency to “hide” overspending?
Generally it is unknown. In some cases, it can be a surprise to the overs pender how much they are actually spending. With that can often come shame, guilt and fear, so you have to be careful (that it doesn’t become) a cycle of overspending to deal with that confrontation of spending. Gambling is a big one because they often think they will put that money back when they “win”! Transparency is key.
What other general advice do you have for someone who tends to overspend in a relationship but isn’t sure how to tackle bringing their outgoings down?
Don’t put your head in the sand or nothing will change. If you can see what is going on, and more importantly what is driving the behaviour, this will help you find your freedom. If you find it too hard to look at on your own, or you are unmotivated, or scared, then get a financial coach or counsellor involved and let them gently work through it all with you. It doesn’t necessarily mean you can never spend again, but it is about being in control of money so you don’t get down the track and realise you should have done things differently. As a coach says “it’s never about the money”; something else is always driving the behaviour.
