Finance isn’t sexy. But that doesn’t mean it should be ignored, particularly if you’re in a committed relationship. In fact, successfully managing your finances can elevate your relationship to new levels. So how should couples manage their money? Here are some good money management tips to get you started.
Be open about your finances
All good relationships are built on openness and communication. Being open avoids misunderstandings, false expectations and unwarranted suspicions. That’s why the simple act of talking about money with your partner is important, no matter how scary or uncomfortable it might initially seem.
If it’s your first time talking about money - perhaps, like many people, you grew up in a family where it was rarely spoken about - you might want to ease into it slowly. You could start by comparing how much you spend on coffee or take away each month, before sharing your salary and moving onto more serious matters such as student loans or other debts.
Timing and your environment are important factors to consider when talking about money management. So make sure you’re in a private space where you won’t be interrupted and can express yourselves freely. If you don’t have a private space at home, going out for a walk could be a good alternative. You’ll also want to make sure you’re both in a good headspace, so consider talking during a weekend brunch rather than a late evening after a stressful day at work.
Finally, bear in mind that very few people are completely happy about their finances. We all make decisions we later question, particularly when we’re young. So remember to show each other the respect and empathy you both deserve.
Decide how you want to manage your money together
There’s no right or wrong way to manage your money. Every person and situation is unique and requires its own approach. But there are some common approaches you might want to discuss with your partner before making a decision.
Keep everything separate
Having your own bank account and paying for your share of the bills is a perfectly fine approach to managing your money. You’ll split the bills the way you see fit and whatever’s left is yours to spend how you wish.
Bear in mind that you’ll need to be extra communicative with this approach because your finances will be effectively hidden from your partner. If you’ve agreed to stick to a budget - for example, if you’re saving for a house deposit - you’ll both need to trust each other to stick to it.
Combine your finances
Having your incomes paid into a joint bank account can be an extremely effective way of managing your money. Because you’ve both got visibility over the account’s income and outgoings, there should be no confusion about how your money’s being spent (and who’s spending it).
This is a particularly good option for those who prefer to treat their incomes as one, regardless of who might earn more. But it’s important to note that having access to each other’s money does require a high level of trust, and shouldn’t be considered lightly.
A middle-ground might be to open a joint bank account that’s only used to pay regular bills like rent, with each person paying in their share each month. The rest of their personal money would be theirs to spend as they wish.
Sharing responsibilities proportionately
If one of you earns considerably more than the other, or one of you isn’t earning at all - if you stay at home to raise children, for example - you might agree for that person to cover the majority or all of the household outgoings. In some circumstances, the main earner may want to provide the other with an allowance - whether to cover regular outgoings like groceries, or a personal allowance to spend as they wish.
This approach might be simpler or more complicated to manage, depending on the exact setup. But in either case, you’ll want to make sure you’re both completely comfortable with this arrangement so that there’s no confusion or resentment when the bills are paid each month.
Calculate your outgoings
To get a grip of your finances you first need to understand how much you’re already spending. This will help you identify where you might be overspending and whether you’ve money left over to put towards savings.
Calculating your outgoings is a simple thing to do together. Simply write down how much you each spend on the following:
- Rent / mortgage
- Council tax
- Water & sewage
- Mobile phone
- Household items
- Car / transport
- Loan repayments
If you do find anything you were previously unaware of - for example, if your partner’s paying off a large loan each month - you’ll now be able to decide whether to tackle it together. In this scenario, one of you might offer to cover some of the bills or agree to spend less money on going out together.
Set your goals and create a budget
Now that you know how much you’re spending, you can decide how to spend the money you’ve got left. The first part is to define your goals. These might include setting money aside for:
- a deposit on a home
- a wedding
- a baby
- a holiday
- an emergency fund
You’ll need to have a conversation about the type of home or wedding or holiday you want since these costs can vary significantly. And if you’re planning on having a child, you’ll want to consider the impact it will have on your daily finances and whether one or both of you will be taking time out from work to look after it.
Once you’ve defined your goals, you can get to creating a budget. There are several ways to manage your savings - from putting the money aside in a separate bank account, to storing it in a ‘savings pot’ (a feature of some banking providers), or locking it away in a long-term savings account. If you don’t already have an emergency fund, you might want to make sure you can access your money quickly if you need it.
Retirement money management tips
It might feel like a long way off, but at some point you’ll need to rely on a pension to provide an income. Being a retired couple can have its advantages - couples spend far less per person in retirement, according to a Which? survey. But even so, you’ll both want to start saving as early as possible to make sure you’ve built up an adequate pension pot by the time you retire.
PensionBee allows you to keep track of your pension savings using a secure easy-to-use app, so you can adjust your contributions over time to reach your retirement saving goals.
Save money where you can
There are plenty of ways you’ll be saving money in a relationship without even thinking about it. Per person, it generally works out cheaper to rent, pay utilities, shop for groceries, and even book a holiday. In fact, people in a relationship generally pay £21 less per week than singletons according to the Office for National Statistics.
But there are other ways you could save money too. Consider these smart money management tips:
- Cover your belongings using the same contents insurance plan
- Insure your cars with the same provider to get a multi-car discount
- Share a joint health insurance plan
- Share a Netflix, Disney+ or Amazon Prime account
- Cook for each other rather than order in
- Enjoy free activities like hiking instead of paying for attractions
- Buy second-hand furniture instead of buying new
Maintain regular financial checkups
Once you’re comfortable talking about your finances, and you’ve set up your finances in a way you’re both happy with, you’ll be well on your way to a successful financial partnership. But it doesn’t end there.
To keep things on track, you’ll want to check in with one another every so often. You could set time aside once a week or fortnight to go through your budget over dinner, or you could even make an event of it and go out for a meal or a couple of drinks.
Remember, no matter which approach you take to managing your finances as a couple, there are few better tips to managing money than simply keeping the conversation going.
The information in this article should not be regarded as financial advice.