What you need to know about money if you’re in a relationship
For all of those in a relationship this Valentine’s Day, once the chocolates have been eaten and the cards stored away for another year, I’d recommend putting some thought into where you stand as a couple when it comes to money. The ‘Money Chat’ doesn’t have to be as dreadful as you are probably imagining it to be – it’s all in the way that you view it. Keep the tone lighthearted and the outcome purposeful.
“MONEY’s new poll of the behaviors of some 1,000 millennials and boomers when it comes to relationships and money found that couples who are in sync on financial issues feel more secure, argue less about money—and have hotter sex lives. But there’s one issue that consistently gets in the way of marital harmony: debt.”
Talk openly and often
Talking about money with your partner, is not the most romantic of topics but it can save you a lot of heart ache later on down the line. The more you speak to each other, the easier the topic gets – I promise. The first time you, or they bring up the subject, it may feel slightly awkward and that’s fine. Talking about money can be awkward and that’s why we need to get talking about it a lot more! It shouldn’t be something we keep to ourselves out of secrecy or shame, if you can trust this person and have plans to live together/buy a home, get married or have children with them then ‘the money chat’ needs to become a natural part of your routine.
Unless you’re going to take your relationship to the next step, for example applying for a joint mortgage on your first home then it’s not absolutely necessary to know someone’s financial situation or history. It’ll all depend on how open the other person is about money too. You’ll know when the time is right to start discussing it – just don’t keep putting it off.
Find out if you share the same goals
Asking your partner how they envision their future is a great way of telling if you’re on the same page and if you want similar things from life. The trick to a successful relationship is communicating regularly and staying on the same page so if they want very different things to you, or they don’t have the same desire to achieve similar things then it’s going to make things more challenging. On the other hand, if you have the same drive to achieve some of the milestones together such as buying a home, travelling or investing then this is a really effective way to reach your goal quicker. Having a second income and someone else to bounce ideas off can really help.
You could be affecting each other’s credit rating
It’s quite common that as a relationship grows, especially if you start living together that you may choose to open up a joint account. If managed correctly, this can save a lot of time and prevent uncertainty over who pays for what. However, it’s worth noting that you are then ‘financially associated’ and if one of you has a poor credit rating, this could affect the likelihood of any future joint applications such as a mortgage or a loan. Be as honest as possible early on, if you know that your credit rating could do with some TLC then action this as soon as possible so that you don’t experience any nasty surprises.
Don’t keep secrets
“Research from Experian has shown that 29% of people have hidden a credit card from their spouse.” If you know that you’re able to repay the outstanding amount on your credit card relatively quickly, then it’s your prerogative to tell people what you owe. However, if you find yourself hiding bank statements and final reminders from your spouse then this could be something more alarming. The best thing to do is to tell them, as they may be able to lend you the money or support you in finding a way to repay the balance. Keeping it to yourself will only cause you to fret which isn’t productive.
There is always a way to make amends. If you’d like to talk to an independent advice service before you approach your partner then there are lots of debt services out there such as the free helpline – National Debt Line or other organisations such as StepChange and Money Advice Service.
Share the financial responsibility
By taking a shared approach to financial matters, it means you’re both accountable for making sure bills are paid on time and you’re equally invested into saving for your future. When one person in the relationship has responsibility for paying the household bills, planning the way the money is spent/saved and overall is the one that makes the final decision when it comes to money it can lead to a number of issues for the one depending on them. Ensure that you are splitting everything fairly, not necessarily equally as one may earn significantly more and is willing to put in more, so that you are still financially independent. Relationships don’t always work out and whilst it may be going very well right now, if they walked away tomorrow would you be able to look after yourself?
Play to your strengths
If you know that one of you is naturally more frugal and the other one has been known to overspend, then each take a task that you know you’ll enjoy. Whoever is the most frugal, could be the one who writes up a budget and looks out for ways you can save money. And the one who likes to spend could be responsible for planning trips away or nights out within the budget so that they still feel like they’re having fun with their money and less likely to fall off the bandwagon.
Each relationship will be at different stages, and as with most things, it’ll change a lot. It’s more than likely that life events will try to test both you and your partner at some stage in your relationship and being there to support one another is key. But, the part that people consider less is if the relationship was to end. Being savvy and ensuring that if anything was to happen between the both of you that you’d still be able to live comfortably is just as important.
A man should be one of many things to you in a relationship, but shouldn’t be your financial plan.