Managing finances as a couple

Emma Watson, head of financial planning and advisory services at Rathbones, shares her top tips on how to manage finances as a couple.

Deck chairs facing the sea

Emma Watson, head of financial planning and advisory services, Rathbones

Managing money as a couple can greatly differ from managing your own money as a single person.  Where you previously only had to budget and save for one, and think only about your own needs and wants, as a couple there is another person’s life goals and financial habits to consider. 

Think about what’s yours, mine, ours

"Whether you’re married or not, it may be wise to maintain your financial independence by keeping your own bank account and savings."

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 as a couple. Setting up a joint bank account can help keep track of your joint expenses but 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 may be wise to maintain your financial independence by keeping your own bank account and savings.

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? 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. For example, is one person more of a saver than a spender? It’s best to be open and realistic about this so it’s clearly understood in the relationship.

Don’t be financially imbalanced

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 even realising. For example, if the main bill payer or ‘finance controller’ became seriously ill or died, would the surviving partner know how to access their finances or pay the bills?  Make sure you have regular, open conversations about your finances as a couple, and that you’re both aware of who your providers are, how you access your account, and that both your names are listed/registered. If the worst were to happen and you’re not named as an account holder, you could be locked out of your finances for some time. For example, any bank account held solely in your name would not be accessible to the other partner if you were to die, so it’s worth considering how your emergency fund is kept and where the day-to-day money for expenditure would come 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 married 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 would have no legal rights to remain in the home if you were asked to leave. Similarly, if one person were to die without a will, you would not have any entitlement to their assets, even if you have children together. If you did receive anything from a will, you could be subject to inheritance tax. If you are living together, or thinking about co-habiting, 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 and you can agree the split between you and have a solicitor draw it up. For example, how would you want a family inheritance to be treated, as a shared asset or belonging solely to the partner who inherited it?

Lasting Powers of Attorney (LPAs)

Property and finance LPAs allow you to say who you would like to make financial decisions on your behalf if you were no longer able to. There is also a health and welfare LPA which gives your chosen attorney the ability to make decisions relating to your care if you were no longer able to. These are especially important to couples who are not married or in a civil partnership, as you are not each other’s legally recognised next of kin.

Make a will

"Writing a will is one of the most important things you can do for loved ones, particularly children, as it means they can be financially cared for and protected for when you’re no longer around."

Writing a will is one of the most important things you can do for loved ones, particularly children, as it means they can be financially cared for and protected for when you’re no longer around. It’s common for people to only write a will 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 benefitting an ex-partner. There are several different types of wills you can have, so it’s best to speak to each other and an adviser on what would suit best. A will is an important legal document that will carry out your expressed wishes, such as how to split your estate, bank accounts, and any personal items.