Partnerships can be torn apart by divergent attitudes to spending
Shacking up is easy to do. You meet someone, fall in love and sooner or later keeping two households just doesn't make sense. So you move in together.
Then the couple muddles along falling into financial patterns that may do neither partner any long-term good.
Yet money can be more important than romance to the long-term success of a relationship. It certainly is when it comes to couples arguing and splitting up.
There are different ways for couples to handle income and expenditure. They may share payment of bills from separate accounts. Or they could each have individual accounts as well as one joint account. Or they may decide to pool their finances. Some pool their money, but give each other a small budget for "me" money so they can spend without feeling that someone else is looking over their shoulder at every purchase.
It's worth being wary about what you're signing up to with joint accounts and credit cards. The Banking Ombudsman's files are littered with sad cases where one ex-partner wasn't aware that he was joint and severally liable for debt racked up by the ex.
Whether the accounts are separate or joint, the money usually becomes joint property under the Property (Relationships) Act after three years.
Every couple is different and there may be income disparity issues to be dealt with. While some couples think 50/50 for bills is fair despite different incomes, others might want to split the bills according to financial ability.
If one party earns 60 per cent of the couple's money, he or she might pay 60 per cent of the bills.
Getting it right from the beginning usually means fewer arguments in the long run. Surprises later on can ruin trust.
There's a big difference if it's a young couple starting out in the world as opposed to two financially established people.
The two partners in a young couple may not have capital to lose but might rapidly build up debt.
One partner may be naive about the other's financial situation.
This may not be a naivety about the laws, but just a simple lack of understanding that other people have different money values. While one may have grown up in a household where expenditure was budgeted and consumer goods saved for, the other could be used to using debt to fund his or her lifestyle.
Sometimes a light will go on for one when he or she sees how their partner handles money. In other cases one partner or both might see the other as just plain wrong. In an ideal world each takes on the other's better money management skills and ditches the ones that don't work.
The best solution to merging finances successfully is to talk, says financial coach Lisa Dudson. Dudson coaches couples and regularly sees financial issues that could be avoided.
"In my experience it's important to talk about money really early in a relationship. I think a lot of couples ignore discussing money as it can be a sensitive issue."
Couples might benefit from pre-marital financial counselling. Finding out early if you have mismatching money personalities is important.
A financially conservative person may not be able to live with an entrepreneurial risk-taker.
Dudson says partners who can understand each other's money values have better discussions about handling money within the relationship.
Sadly, these types of discussions are pretty low down the checklist of shacking up. Sometimes below choosing a pet.
"Having those what can often be called 'courageous conversations' is critical to a successful long-term relationship," she says.
"And of course talking it through with an independent professional third party can be useful."
Often one or both partners suffer wilful delusion. They are so in love or lust they don't want to see impending financial problems. Emotion rules and bad decisions can be made. Those bad decisions might simply be spending a large sum of money on ridiculously large gifts for the other person. It's not unusual for one partner not to even know how much debt or equity the other party has.
Just because he or she owns property it doesn't mean that they're not sinking in debt that is about to be sexually transmitted to the new partner.
It never ceases to amaze Dudson that two people can sleep together yet not be willing to say, "I'll show you mine [money] if you show me yours." Quite often, says Dudson, one or both parties may have no idea what their true net worth is.
"I have a new man in my life and when we get to the point I am going to show him what I have and I want to see his bank account before we do anything together [financially]."
Prenuptial agreements are becoming more common in New Zealand.
However, couples who have just met don't really want to be saying to each other, "If we split, this is what you'll get - or not get." It's just not romantic, even if it is practical.
Most couples have up to three years to make the decision about whether they want a prenuptial agreement.
Not everyone with a large wealth divide will want to have a prenuptial agreement.
Too much power in one set of hands may not be good for a relationship's survival.
Marriage, civil union, or de facto coupledom without a prenuptial agreement is one way to even out that power imbalance. If things go wrong, however, it could be a real king-hit for the partner who brought the bulk of the money to the relationship.
Questions to ask each other before saying "I do" and marrying or moving in together.
What assets and liabilities do we each have? This needs to be out on the table to avoid surprises in the future.
What is your money history? Did your parents manage money well? Has your partner got a good or bad credit record? Are there outstanding debts? Do you pay child support?
Do you live from payday to payday? This suits some people and makes others anxious. If your partner lives this way and you don't you'll need to find coping mechanisms.
Will we pool our money or keep separate accounts? Is this a long-term solution? What will happen if we have children? How will we pool money then?
Will we budget? If not, how will we plan our spending?
How much can each of us spend without consulting the other? Do we have a sum of money each payday to spend on ourselves as we see fit?
What are savings for? Will we save to buy cars and holidays? Or should we have savings to buy a house or save for retirement?
How should we divide up financial duties such as planning and paying bills? Both partners need to know what money is coming in and out of a household. Sometimes, however, it makes sense to have one party in charge of day-to-day budgeting and spending so that bills don't fall through the cracks. Or one party could be responsible for macro budgeting and the other day-to-day spending.
Are you a tightwad, a spendthrift, or somewhere in the middle? If each partner is at different ends of the scale then you've got a lot of financial planning to do for a happy marriage.
What do you spend on yourself? If the answer is nothing, or conversely to the very limit of your credit card, there could be problems looming.
What are your financial priorities? Is it repaying debt, buying a new car, buying a home, spend and be happy? And so on.
What stupid things have you ever done with money? This one can be a real eye-opener.