Discussing finances as a couple may not be the most romantic of topics, but it’s an important thing to regularly discuss with a partner, especially during times of economic uncertainty and volatility.
From how you manage stress to what your day-to-day spending is like, sorting finances as a couple can differ greatly to managing your own money as a single person.
Where previously you had only to budget and save for one, and think only about your own needs and wants, suddenly there is another person to account for, including their life goals and financial habits.
Furthermore, amidst a cost-of-living crisis, it’s even more important to discuss your finances together, considering your potential financial risks, establishing goals, priorities, and management techniques.
Emma Watson, Head of Financial Planning at Rathbones Group Plc, shares her top tips on how to manage finances as a couple.
Consider your financial compatibility
Financial compatibility is very important to the long-term success of a relationship. It’s not only about pounds and pence, but also attitudes, aims, and beliefs.
If you are to share a lifetime with someone, it helps if you are both on the same wavelength when it comes to your life goals. Do you both have the same aspirations such as starting a family or when to retire?
All life goals will require saving for, so it’s good to know you are on the same path early on in your relationship.
As part of this, take some time to figure out your money style and what beliefs you each might have about money. For example, is one person more of a saver than a spender? Or consider the way you spend. Do you value experiences or travel over material things? It’s best to be open and realistic about this so it’s clearly understood in the partnership.
Think about what’s yours, mine, ours
Every couple manages their finances differently, whether that’s splitting everything 50:50 or having one salary used to pay for everything day-to-day and the other to save for the future. It’s whatever works best for you and as a couple.
For those who feel comfortable with the idea, setting up a joint bank account can help keep track of your joint expenses.
However, before signing up to this be aware that if one person has a bad credit rating, as soon as you have an account together you will be ‘co-scored’, and your credit ratings will become linked.
Whether you’re married or not, it’s wise to maintain your own financial independence too by keeping your own bank account and savings alongside your joint assets.
Keep financially balanced
It’s very easy in a relationship to have one person take the lead in managing all the finances and bills. But this can leave the other person quite vulnerable without them even realising it.
For example, if the main bill payer or ‘finance controller’ became seriously ill or passes away, would the surviving partner know how to access their finances or how to pay the bills?
Having regular, open conversations about your finances, including who your suppliers are and how you access your accounts, are crucial. That way, you’re prepared if the worst were to happen.
Keeping both your names listed/registered on accounts can also keep you protected from being locked out of your finances. For example, any bank account held in your name solely will not be accessible to the other partner if you were to pass away.
So it’s worth considering how your emergency fund is kept and where the day-to-day money for expenditure comes from.
Understand your rights if you’re not married or in a civil partnership
Whether you’ve been with a partner for two years or 20 years, if you’re not a married couple or in a civil partnership, you need to be aware that the same legal and financial rights do not apply as if you were.
For example, if you were to break up, unless you are joint owners of a property, you have no legal right to remain in the home if you are asked to leave.
If you are living together, or thinking about it, it’s worth considering making a cohabitation agreement to ensure you both know where you stand.
Cohabitation agreements will set out your rights to property and assets. You can agree the split between the two of you and have a solicitor draw it up.
Make a will
Writing a will is one of the most important things you can do for any loved one, particularly children, as it means they can be financially cared for and protected when you’re no longer around.
It’s common for people to write a will only when children arrive. But really, they should be written and updated at important life stages, including when you get married.
Many people don’t realise that while marriage will invalidate your current will, divorce does not. And so unless you update your will you may still be benefiting an ex-partner.
There are several different types of wills you can have, so it’s best to speak to each other and a solicitor on what would suit best. A will is an important legal document that will ensure your expressed wishes, such as how to split your estate, bank accounts, and any personal items, are carried out.
Communication is key
Even the most compatible of couples can struggle to communicate about money matters. Often, bringing up the subject can feel uncomfortable, so scheduling some time to talk about your finances can help, particularly when the reality of rising inflation and interest rates have the potential to trigger conflict.
Coming prepared with a list of your worries or goals can help progress the conversation, ensuring you’re both on the same page and more aligned when discussing your financial future.
Open and honest conversations about your finances aids financial compatibility and will help mitigate concerns and potential conflict down the road.
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