There’s no doubt that there are some financial advantages to getting married and pooling your finances. As well as becoming a two-income household, joint incomes can put you in a stronger position when it comes to applying for big loans like a mortgage, enabling you to borrow more and making you a more attractive proposition to a lender.
What’s more, once you’re coupled up any good credit rating you’ve built up on your own will still stand. That’s because when you get married, your own individual bank accounts, credit cards and personal loans remain yours and yours alone. And the same applies for your partner. The only time your spouse’s credit history affects you is when it comes to joint accounts and applications.
Understanding your collective finances is an important piece of building confidence and a strong financial foundation together. In a recent survey we found that 44% of respondents only had moderate confidence in their partner’s ability to make good financial decisions, with a further 12% having even lower confidence1. We’ve identified six important financial conversations that can help set you up for a brighter financial future together.
1. The financial health conversation
Understanding your financial health is important as individuals and as a couple. As unromantic as it may be, it’s also a really good idea to share one another’s credit files. Then you know exactly what, if anything, could crop up when it comes to combining your finances. If there are any anomalies take the time to get them fixed. Having a clear understanding of your starting points and tackling any issues before they become real problems will pave the way for a harmonious financial future.
2. The money mindset conversation
Some people are spenders, some are savers, some fall in the middle and others veer from one side to the other. Whatever your own personal disposition, make sure you share it with your partner.
Don’t panic if you find you have completely contrasting attitudes to money. If you work together, it can be beneficial to think differently and bring some financial balance to your relationship. There are also actions you can take to manage your differences.
For instance, if one of you is a saver and the other a spender you could keep separate bank accounts as well as having one joint account that you use for all shared expenses - like rent/mortgage, food, bills and so on. It’s a simple way to prevent your money differences from driving you apart.
3. The credit conversation
According to The Money Charity, unsecured debt levels were at £3,947 per adult in the UK at the end of July 20202. With debt on the rise, it’s even more important to be open about your full financial picture. Finding out about hidden debt is one way to bring the ‘honeymoon period’ to a screeching halt.
Be honest. If your partner is added to an account on which you have a poor record, their credit score will be adversely affected. Similarly, if you’re named on a spouse’s account on which they have debts, you’ll become jointly liable for paying off those debts. And if your partner defaults on any payments, the creditor can choose to come after you for the entire sum. That’s tough and it’s also why you should both know each other’s debt obligations.
4. The earnings conversation
It’s not just what we owe that many of us keep quiet about, but often how much we earn. Being secretive about what you earn doesn’t bode well for your future together. Pretend you earn more than you do, and the shortfall will soon become apparent. Lie about what you really earn, and you sow the seeds for a relationship that’s lacking in trust from the start.
While talking about your salaries might feel awkward, planning a life together means managing your day-to-day expenses and working towards joint short and long-term goals. Having a full picture of earnings will enable you to manage your finances more thoroughly and potentially more equitably. Depending on your circumstances, you may also be able to benefit from tax allowances for married couples.
5. The protection conversation
While it is a task that is often overlooked, having a Will in place that clearly states your wishes ensures that your loved ones are taken care of if the worst were to happen.
Though your pension savings aren’t covered by a Will, you can make sure your provider knows who you’d like your pension paid to by nominating a beneficiary. This can be done by completing an Expression of Wish form. Log into PlanViewer or speak with your employer to find out more.
You may also want to think about health and life insurance, and income protection so you can protect your lifestyle and loved ones from the unexpected.
6. The ‘hopes and dreams’ conversation
Once you’ve tackled all these conversations and truly laid bare your most intimate financial details, then you’re ideally placed to talk about your future hopes and dreams.
Discuss your future financial goals and set in place realistic plans to achieve them. Knowing not only exactly where your finances are, but also where those of your partner are, means you’re in a very strong position for a bright financial future together.
If you haven’t done so already, take a moment to both get your Fidelity Financial Wellness Score, which gives you a picture of your financial fitness in four key areas: budgeting, debt, savings and protection.
1The Fidelity Global Financial Wellness Survey, 2020
2 The Money Charity, Money Statistics September 2020
The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Tax treatment on pensions depends on individual circumstances and all tax rules may change in the future. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.