Q My husband and I got married in 2019 and we have a joint bank account. During the pandemic, he developed an addiction to shopping on Amazon. He gets a package from Amazon almost every day — it could be a new pair of trainers or a new gadget. The savings in our bank account have been almost depleted. How can I rescue our joint finances?
Kate, Co Wicklow
A It is said that the secret to a happy marriage is a good sense of humour and a short memory. Upon saying ‘I do’, you inherit your spouse’s financial past, present and future, and much of that can be unknown. Money can be a sensitive topic to broach because we attach a high degree of our self-worth and security to our income and assets.
The bedrock of a successful money marriage is communication — the ability to have unpleasant conversations about money. Sweeping misunderstandings under the carpet will only compound over time, leading to blame and acrimony.
A joint bank account is a practical solution for shared spending and saving but can become a source of frustration and vulnerability if not properly respected. Your financial boundaries are as important as your personal boundaries. The Amazon shopping addiction could be a direct consequence of the pandemic; emotional spending is no different to emotional eating. We spend and eat to feel better. Understanding the root cause and not the symptom is the key to unlocking positive change.
Your savings are a security blanket for the unexpected expenses life inevitably throws at you. As your savings are being eroded, your lifestyle spending will exceed your earnings. The likelihood of slipping into debt grows as long as this continues.
Schedule time to sit down with your husband and have an open and honest conversation about your personal finances. Seek to understand what’s driving the persistent frivolous spending. You can both get on the same page by creating a list of individual and shared financial goals based on what you both value most, whether it be saving for a deposit on a home or starting a family. Prioritising your basic needs and financial goals is fundamental to your financial future.
‘Should we dip into the kids’ college education fund to see us through the cost-of-living crisis?’
Q We received the Government’s double child benefit payment for our two children, aged six and three, in November and I immediately deposited the money into a post office savings account that my wife and I set up to save for our children’s college education. However, with the rising cost of living, money is now tight. My wife wants us to use the child benefit payments and dip into the children’s savings if we have to. I disagree because I worry so much about how we’ll pay for our children’s accommodation when they’re in college. What should we do?
Ruairí, Co Roscommon
A The child benefit payment is to support parents with the expensive task of raising children. While you have dedicated the payment to your children’s college education, it is not your children’s savings per se, nor should you feel guilty about dipping into those savings — the cause of your dilemma is the squeeze on your income due to the rising cost of living.
Inflation surged to more than 8pc in 2022, meaning you would have needed to spend 8pc less or earn 8pc more to balance your budget. Spending less than you earn creates a savings rate that you can use to finance your sinking fund i.e. a savings account for future spending that falls outside your monthly income. You should be borrowing from your sinking fund, not from your children’s college education savings.
If you continue saving your child benefit payments, you will accumulate €60,480 in total. Current college accommodation costs are around €6,000 per year, so the cost of accommodation over four years for both children would amount to €48,000. However, if inflation averages 3pc per annum over the next 12 to 15 years, the amount would be €72,000 by the time your children attend college, leaving a €11,522 shortfall. You can address this shortfall by saving an extra €64 per month, by positive investment returns if invested, by availing of scholarships or grants, and by part-time work during college.
