DAVID KOCH: The human toll of this cost-of-living crisis is devastating, and can’t be ignored

Interest rates to stay higher for longer. Inflation stickier than expected. The cost-of-living crisis continues.

These are the economic headlines hitting the household budgets of every Australian. Yesterday’s disappointing monthly inflation figures show this perfect economic storm will continue to put the financial squeeze on everyone.

But while economists pore over every economic data point and analyse them minutely, I worry about the human cost this financial crisis is causing. Financial stress on relationships and on mental and physical wellbeing can be devastating.

More than three quarters of Australians say the rising cost of living has impacted their relationships or ability to socialise according to new research from comparison website Compare The Market.

One in five people (23 per cent) said money issues had put a strain on their relationship with their partner or spouse. But romantic connections aren’t the only dynamic under pressure.

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 for support to buy a home or cover the cost of household expenses.

More than a third of Australians (36 per cent) said they had to say no to social outings because they could not afford them.

This is the real cost of rising prices on people’s happiness.

Millennial marriages have been hit the hardest, with 38 per cent confessing that rising costs has caused the tension. They’re the generation hardest hit by rate rises because they’ve taken out more debt to buy their houses and they are often balancing that tricky stage of raising a family.

More than a third of Gen Zs and Millennials also blamed rising costs for causing tension in their relationship with their parents. This is the generation caught by rising rents.

On the flipside of this, 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).

One of the keys to any healthy relationship is to be transparent about money and to work through the financial crisis together. You need a plan.

Work as a team

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.

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.

Online news feeds, newspapers, television and radio offer financial summaries and regular personal finance segments. 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.

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.

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 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.

Save what you can

You and your partner need to have a common vision of where you are going with your money. Start by setting savings goals.

Talk about where you want to be financially in the short, medium and long term and how you’re going to 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 couples on 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 spend the lot.