Five financial moves worth discussing with your better half

by Brian Byrnes @ Wealthsimple

Financial conversations with your partner can be scary. No, they can be terrifying. But they are an incredibly important step in securing a strong financial future together whether you are just starting out, have children in the mix or are planning for your retirement.

#1: First off: Come clean on your finances

Letting someone see your bank statement is a pretty vulnerable, scary thing to do. Maybe you haven’t confessed to your partner about your expensive trainer fetish or don’t want them seeing the number of times you’ve picked up a cheeky Nando’s en route home. The thing is there is nothing like having another adult around to scrutinise your financial accounts for you to admit to yourself what your spending habits really are.

The good news is that there are easy ways to make sure you are separately, and collectively, both on track financially speaking. And one of those ways is the 50/30/20 rule. It’s pretty simple. You put 50% of your money towards necessities (think rent, transportation, groceries and mobile bill), 30% towards wants (trainers, Nando’s, fun things) and 20% towards saving – whether it be a pension, stocks & shares ISA or cash ISA (or preferably all three).

#2 Make a will: Get the sad stuff out of the way

Thinking about what will happen to your money after you’re gone rarely tops anyone’s personal finance list but ‘end of life’ planning is one of the most important things you can do to protect the ones you love. In the UK alone, 54% of people don’t have a will written which means that in the event of their passing their assets and wishes are left to the discretion of the law.

When it comes to writing a will, don’t wait. Make an appointment with a lawyer or do it online. If you have a simple estate – property owned in one country, some assets, maybe a child or two – you can easily use an online legal will platform to easily create your own.

Another important step is making sure you have a beneficiary named on your pension accounts. A beneficiary is the person that receives your money in the case of your passing. The majority of people skip naming a beneficiary when they open a pension account but it’s critical to have someone named on your workplace pensions (both past and present) and any personal pensions you have.

Lastly, a good thing to do with your partner is to create a digital vault, on a password manager like 1Password, where you and your partner house all your financial accounts and passwords so that both of you have access and ownership for the future.

#3 Parental Planning: What to do when you decide to have children

While we can’t tell you how much to prepare for the arrival of a new family member as a parent, there are some specific things you’ll need to do to get ready from a financial perspective. Here are a couple of things you absolutely have to do before (or just after) you have children with a full list available here:

  •  Start saving. Here’s the thing: One reason is simple math. There are literally going to be more people to take care of, and these new people are going to be revenue negative for the foreseeable future. The second reason is that having kids makes living paycheque to paycheque way more perilous and ill-advised. Once you have an emergency fund established in a cash savings account, ISAs (Individual Savings Accounts) are a great account type to consider for a flexible saving option. With ISAs your annual contribution room is £20,000, you don’t pay any tax on growth from the account, and you can house money in either a cash or stocks & shares option.
  •  Secure your child’s future. The earlier you get started, the more time you have for your children’s savings to grow. A JISA (Junior Individual Savings Account) lets you stash £4,368 away for your children annually and can be saved through a cash or stocks & shares option. Children can’t access the account until they are eighteen which gives the account a great runway to seek healthy returns and weather market ups and downs if you choose the stocks & shares route.
  •  Start your children’s financial education early. Including your children in discussions around how to approach money early on can only pay-off in the future when the stakes are higher. Recent studies have shown that parents who discuss money with their children lead them to be confident on the topic later in life.

#4 Benefit from joint finances

There comes a point in a relationship when it’s easier to combine your finances than to separate them. While the concept may be scary at first, there are huge benefits to being open and honest about money with your partner.

A good place to start is by building a joint emergency fund with your partner that both of you have access to. An emergency fund is typically housed in a cash account and is a savings pot with 3-6 months worth of money that can cover you when the unexpected comes up – like losing a job, a home repair or extra medical expenses.

Joint current accounts are another way to easily share your finances and are especially useful when it comes to day-to-day household spend or paying your monthly bills.

Lastly, if you are going down the marriage route the Married Couple’s Allowance is absolutely something you should know about. It can help reduce the overall taxes you pay as a couple if you are married or in a civil partnership – saving you anywhere from £345 – £891 annually.

#5 Keep talking about money

Here’s the thing about money: You don’t talk about it only once. All those resentments and hang-ups, all the shame and recriminations that might have been present when you first decided to talk finances with your partner? They’re going to come back. Habits die hard, and it’s hard to always be on the same page when it comes to spending habits, saving for the future, splurging on the present, etc.

Try a brief weekly, or even monthly, check-in to see what’s going on with your finances and whether you’re meeting your responsibilities and making progress on your goals. Think of this like a “money date” where you come together for a 10-to-15 minute discussion to talk about what’s going on.  The future you will thank you!

Wealthsimple makes investing simple, smart and affordable. Brian is an Investment Adviser at Wealthsimple, speaking daily to people across the UK on their financial goals.

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Brian is an Investment Adviser at Wealthsimple, a leading digital investing service that combines technology with human advice to make smart, automated investing available to everyone. 

Brian specialises in the discretionary management of client portfolios, pension funds and socially responsible investing. Prior to joining Wealthsimple, Brian was a Wealth Manager with Coutts advising high net worth clients on investment planning. Brian graduated from University College Dublin with a Bachelors of Commerce and has a Masters in Finance from the Michael Smurfit Graduate School of Business. 

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