Matthew Perrin was CEO of Billabong when it had its public float in 2000. Perrin netted about $60 million from that sale, but was jailed in 2017 for fraud over the forging of his then-wife’s signature on a bank document to increase a line of credit.
Relationship counsellors tell us that money is one of the most common sources of fights between couples. Money arguments generally only start after two people been in a relationship for some time.
These arguments can be more frequent and amplified when the couple owns a business.
In the early years of the business, if there is a lack of financial education, the principle of “all money is fungible” often applies. What this means is that one or both people in the relationship consider all monies – business and personal – as theirs.
Difficulties multiply when one or both people incur personal debts, and they don’t inform their partner. I have seen episodes of this when a couple-run business applies to a bank for finance, and a debt – whether it be a personal loan, overdraft or credit card – is revealed by the bank’s credit check. All sorts of arguments develop about trust when this happens and can spill into other fundamental aspects of the relationship, such as fidelity and commitment.
All couples should have money rules that allow them to have a reasonable lifestyle now and in the future. This presupposes they have financial objectives and plans.
Money management is even more important in a business environment, as there is often (particularly in the early years) uncertainty about the future. This uncertainty is compounded when there are children. In this era of second marriages/relationships and blended families, many factors can impact a couple’s finances.
Although every couple will have unique requirements when it comes to money management, these are the broad principles I recommend to my clients who are in business together:
- Each partner draws a regular salary with income tax deducted.
- Calculate how much of this net salary should go to a personal account and joint account. Set up automatic payments for these amounts.
- Have a business credit card that is paid in full each month.
- Prepare a list of agreed perks, such as: parking, mobile phone, vehicle, subscriptions, etc. This is to make the parties aware of their benefits and to ensure they comply with taxation requirements.
- Do not make any payments outside the rules you have set.
- Have a prepaid Visa or MasterCard. Load it with a fixed amount every month to cover regular expenses.
- Have a credit card with a small limit on it that can be used when the debit card is not acceptable.
- Have a personal bank account with an ATM card.
I work with couples and businesses to manage their business and personal finances, reducing stress and ensuring a sound financial future inside and outside the business. Email me at email@example.com.