Yahoo Finance Interest rate crisis puts Aussies on the verge of divorce
The Compare the Market Economic Director weighs in on startling new research showing three quarters of people are having relationship issues due to money woes.
They say money can’t buy you love. But sometimes it can help.
One of the toughest tests for a relationship is when facing financial challenges. And that’s what’s happening to many right now.
According to new research from Compare The Market, more than three-quarters of Australians said the rising cost of living has impacted their relationships.
Whether it is due to not having enough money to socialise or disagreeing on how to spend or save, money seems to be causing a lot of issues for people around Australia.
One in five people said money worries had put a strain on their romantic relationships.
Millennial marriages are in the most trouble, with 38 per cent confessing that rising costs have caused the tension.
They’re the generation hardest hit by rate rises because they’ve taken out more debt to buy their houses. The cash rate has risen to 4.35 per cent, well above the 3 per cent that banks use for stress testing.
But romantic connections aren’t the only dynamic under pressure.
Cost of living divides Aussie families
One in 10 people said financial problems had damaged their relationship with their parents, while 8 per cent said rising costs had caused a rift with their children.
It comes as a growing number of Australians turn to their parents to buy a home or cover the cost of household expenses.
Has the rising cost of living impacted your relationships? | Gen-Z | Millennial | Gen-X | Boomers | Total |
Yes, rising costs mean I can no longer afford to socialise as much as I used to | 25% | 37% | 23% | 15% | 36% |
Yes, rising costs have put a strain on my marriage/romantic relationship | 15% | 38% | 32% | 15% | 23% |
Yes, rising costs have put strain on my relationship with my parents | 36% | 36% | 26% | 3% | 10% |
Yes, rising costs have put a strain on my relationship with my children | 8% | 27% | 39% | 27% | 8% |
No, rising costs have not impacted my relationships | 19% | 24% | 25% | 32% | 22% |
Survey of 1010 adult Australians was conducted in April 2024.
Renters aren’t much better off with the nation’s median rent at more than $600 per week, according to CoreLogic data.
More than a third of Gen Zs and Millennials also blamed rising costs for causing tension in their relationship with their parents.
On the flipside, Gen Xs and Baby Boomers said the cost of living has put a strain on their relationship with their children (39 per cent and 27 per cent, respectively).
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I’ve found that one of the keys to any healthy relationship is being transparent about money.
Whether that’s been with my wife Libby, my kids or grandkids as well. It has been so important for me to be open and honest about finances, and helping alongside my grandkids now as well.
If you’ve been invited somewhere you can’t afford, don’t be embarrassed to suggest a cheaper alternative.
A good partner or friend should support you and understand your situation and your bank account will thank you for it.
How can I ease financial stress?
Step 1: Work as a team
You’re a couple, so it’s important you resolve problems and make financial decisions together. Money matters are a responsibility that should be shared. You don’t want one person deciding how to spend and invest for you both, it’s a huge responsibility and can be very stressful.
Now, more than ever, both partners in a relationship need to work together to cope with the difficult times ahead. If that’s not happening in your relationship, start making changes before the stress builds to breaking point.
Strains are going to be put on a relationship when there’s simply not enough money to make ends meet. You need open communication and honesty. Put your heads together and work out the best way to confront your financial problems and positively move on.
Step 2: Educate yourselves
For two people to jointly manage their finances, each partner must have a basic understanding of money. You don’t have to do a fancy investment course, start by opening your eyes and ears to financial news.
Daily newspapers, television and radio offer financial summaries and regular personal finance segments. Monthly magazines give an overview and have relevant changes in legislation and articles of interest. Then there are whole sections of well-written, easy to understand books on money which provide enormous help.
The more knowledge you have the more you will understand advice from your bank, financial planner, and those well meaning family and friends.
Step 3: Find a financial mentor
Seek as much free information as you can get. If you know someone who manages money well ask them to be your financial mentor and pick their brain. If you want to keep your finances confidential, look for guidance from someone outside the family.
Just because you ask for advice doesn’t mean you have to follow it. Just add it into the mix of information you’re collecting. As a couple, go through all this financial knowledge and advice and decide what will work best for you.
Step 4: Develop a plan
Your relationship will be strengthened when you work out a routine for handling your money and find solutions to any financial problems.
Start by doing a family budget together. Tally your income, family benefits and any money from investments. Then get your bills and receipts and try work out how much you’re spending each month. Your budget will show you where your money is going, how much is left over at the end of the month and where you can cut back.
Step 5: Save what you can
You and your partner need to have a common vision of your financial future. Start by setting savings goals. Then, talk about where you want to be financially in the short, medium, and long term and how you’ll get there.
Paying off the mortgage as soon as possible or making contributions to superannuation are two of the best savings goals you can set. Concentrate on the mortgage first, and when that’s gone make superannuation the priority.
I reckon the biggest thing I’ve learnt in all my years as a finance journalist is that couples earning average weekly wages who are disciplined with their money and work towards the same goals often end up with more wealth than those earning three or four times as much but spending the lot.
