Few of us like to think about the end of a romantic relationship, but having a plan for how you’ll manage your money if it happens could shield you from financial heartbreak.

Relationship break-ups are never fun, but when you throw money into the mix, they can become particularly complicated. While you’re trying to grieve the partnership, you’re also having to think about how to divide assets and bank accounts and perhaps worrying about how your future finances will be affected.

Although few of us enter a relationship anticipating the end, having a plan to protect your personal finances is often wise. These suggestions may help.

1. Have the important conversations.

Lots of people find talking about money awkward or unpleasant, especially in the early stages of a relationship, when you’re worried about quashing the romance. However, knowing where each partner stands can save time and pain down the track.

Consider setting aside some time with your partner to talk about your overall money philosophy – such as future aspirations – and also what you would do in the case of separation. For example, you could talk about whether each partner would take out the assets or belongings they brought into the relationship.

While things can and do change when break-ups happen, having a foundational understanding of each other’s preferences may be a good launching pad for further negotiations.

2. Consider keeping separate bank accounts.

A joint bank account has many advantages if you’re pooling your income and spending or saving for the household. However, retaining your own bank account – even as a secondary account – gives you autonomy and can make things a little bit simpler if you separate down the track.

3. Think about a financial agreement.

If you have assets you’d like to protect in the case of a break-up, you may consider a pre-nuptial or binding financial agreement. Essentially, the legal document dictates who will end up owning which assets if you split up with your partner. For example, a document may be drafted to ensure each partner leaves the relationship with the same pool of assets they brought into it. Before going down this path, you’ll need to seek legal and financial advice.

4. Speak to experts and people you trust.

On the topic of advice, it’s often worth getting a second opinion about your unique financial circumstances. You may turn to a financial adviser or a lawyer, depending on your preferences. You could also reach out to a trusted friend or family member for informal guidance.

If you’re struggling with money in the context of your relationship or otherwise, you can always call the National Debt Helpline on 1800 007 007 or speak to a relationship counsellor.

Source: Customer Owned Banking Association (COBA)

02 November 2023