Navigating your finances as a couple

Hilaria Graig 

February may be the month of love, but we all know financial differences can place a huge strain on any relationship. Fortunately, if you approach your finances together and give them careful thought, such difficulties can be avoided. The key is to engage in frank and open discussions about them and calling in the help of an objective professional. 

1. Lifestyle aspirations and drawing up a financial plan
A key part of any committed couple’s financial life is having a financial plan that covers short- and long-term goals. A financial planner can help you prioritise your goals and create a plan to reach those goals. It’s a good idea to have a discussion with your partner before your meeting with the financial planner, covering the kind of lifestyle you would like to live as well as saving for emergencies, retirement, children’s education, deposits for big purchases or perhaps a wedding. You should also discuss how to prepare for unforeseen events like death, illness, disability and unemployment. 

As a couple it’s important to align your future aspirations because the amounts you need to reach your goals is dependent on these, 

2. Budget for monthly savings, spending and donations together

Budgeting is an essential tool to understand where one intends to spend money and how much, and for tracking past spending. Discuss with your partner how much is available to save, what you can afford to donate, but also look at where you can free up some cash. Make time to review your budget regularly to ensure you are spending as planned but also to plan ahead for additional future expenses to your budget, e.g. childcare when a child is born or additional money for transport when taking up a job further from home.

3. How to formalise finances in your relationship to allow for unforeseen events

A will and antenuptial contract are some of the important legal documents that can help you manage the distribution of assets or debt in the event of death, insolvency or divorce. The type of marriage contract you chose will also affect how financial and physical assets and debt, which existed before and after the marriage, are distributed. Your financial planner, working together with a legal advisor, can help you decide the best route to plan your estate.

4. Separate or joint bank accounts?

There are pros and cons to both options. But whichever you choose, you must allow some level of independence in making financial decisions to maintain a healthy relationship. The typical banking account options to choose from are:
A joint account: One partner takes on the role of main account holder and the other partner has signing rights. All the household expenses are then paid from this account. However, if the main account holder passes away, the account will temporarily be frozen and the money will be inaccessible to the other partner.

Separate accounts: If you choose this route, you need to frequently discuss and agree how to split the financial responsibilities. Such responsibilities may need to be adjusted for job losses, career breaks or other life-changing events.
A household bank account: It can be useful to have one household account, without a credit facility, to which you both contribute on a monthly basis. It can be used for debit orders and day-to-day household expenses. With this option you can keep separate personal accounts and thus avoid the limitations of a joint account.
“Your responsibility to your partner is to be financially responsible for yourself and to communicate regularly. You should both be empowered to handle finances. Work on forging a financial future together, with the big picture in mind, and follow the guiding principles of transparency and trust.”