Financial planning

Tackling tough money conversations with your partner

Becoming part of a couple is an exciting time. But along with the anticipation of a shared life it’s important to consider some of the practicalities – including finance. George Howard, our Chartered Financial Planner, looks at some of the important money conversations to tackle with your partner.

Talking about money is sometimes challenging and can expose some of your or your partner’s vulnerabilities. Yet managing your finances jointly will be an important element in the life you’re planning to share – both now and in the future. It’s essential to explore how and where your attitudes to money and values align especially as you build a life together and deal with the events which life will undoubtedly bring about. This might also help you both avoid any potential conflict about money both now and in the future.

There are likely to be some particular periods in life when finance becomes a valuable conversation to have.

Bringing finances together

At the start of your relationship, it’s unlikely much in the way of money conversations will have come up – you’ll be enjoying spending time together and managing your finances separately. But as you begin to map out a future, the time will come to tackle how to approach your finances as part of a couple. It’s likely that you’ll both have independent financial set up. So how do you bring things together? Which elements are you comfortable combining and which would you prefer to keep apart? Some of the sticking points might be dependent on your current salaries, and who is comfortable or more able to pay for particular items. You might need to think about your spending priorities, and whether each of you needs to prioritise particular financial commitments – an open discussion here about debt and life goals is key. Consider too your household budgets, holidays and social life – and your aims in terms of home ownership, travel and work/life balance. You may each have your own home, or plan to buy one together. Some of the options you might want to explore include maintaining your own accounts, contributing to a joint account, or bringing everything together. The best approach is to create a plan and set some goals around life events: home ownership, paying off debts, marriage, children and investments. Don’t forget to think about long-term plans and retirement too and where and when you need to bring one another into your Wills, or other Estate plans. These conversations might be particularly relevant as you buy a home together or start to own a property jointly.

Having children

If you decide to have a family, it’s likely to prompt a review of your financial position. Although maternity, paternity and adoption leave is now much more generous, this period of your lives will bring with it an inevitable financial impact. Will one of you take a break to raise the children, and will this impact your household income? It’s useful to create a budget tracker to help to decide how best to manage your finances during this period. You might need to compromise on some aspects of your lifestyle – although having children is likely to shift some of your priorities, at least in the short term. One element to consider is whether you can continue to save and invest at the same rates. And don’t forget to think about your pension payments too; if one of you has chosen to take a career break will your partner make pension contributions on your behalf or top up any gaps? Consider too your priorities over your children’s futures and whether you need to factor in childcare costs, private education and making regular contributions to savings or trust funds.

Other family circumstances

The same approach is advisable if one of you takes a career break for other reasons such as an unpaid sabbatical, volunteering, retraining, or to care for older relatives. As you approach these life events, you’ll need to have open conversations about how you and your partner will manage your finances through these periods to support one another.

Blended families

Of course, there’s every likelihood that you and your partner may meet after having children – who might live with you, or not. This can be a particularly tricky area to navigate, especially when it comes to money. You both may have financial commitments to other households, or need to decide who pays for what if you or your partner’s children live with you. And as well as day-to-day situations, there will be other events to discuss including planning and paying for shared holidays with the children or paying for tuition or private education. The bottom line here will be how do you attempt to keep things fair and equitable, if that’s your shared priority. Consider longer-term plans as well; when the time comes how will you divide your Estate amongst children and stepchildren? Although everyone should always have a valid Will in place, the value of a clear and up-to-date Will cannot be underestimated when you are part of a blended family. The key is to be honest and open – there are likely to be bumps along the way but tackling these tough conversations will help. Consider the future and potentially challenging situations too; your new partner may be moving into the family home which you’d planned to eventually leave to your children. The practicality of this should be thought through carefully; for example, there are ways and means to protect the home for your new partner through their life whilst leaving the asset to your children.

Differing financial values

One last situation which is worth exploring is whether you have the same financial values as your partner. You may be a saver, whilst your partner is more of a spender. This conversation can be particularly tricky, especially if one of you continues to spend money on seemingly unnecessary items whilst you’ve mutually agreed to save for something specific together. The sooner you can discuss how to align your values or happily separate some areas of your finances, to avoid potential conflict, the better.

Discussing money with your partner can be challenging, especially when it comes to facing different circumstances which might come up along your lives. Thinking long-term as well as short-term will allow you to share your life goals and explore how your joint finances can work for you both. A good approach is to consider how your money can work to support you in achieving financial freedom together, and all the benefits this can bring to you and your relationship.