33% of couples say they’re financially incompatible. Here are 7 tips for creating financial harmony
How often do you talk about money with your partner? The way money is handled in a relationship can sometimes make or break a couple, and research suggests it’s something many people struggle with.
According to a survey from Royal London, 62% of couples in the UK say they have argued with their partner about money. The most common reason is that one partner is deemed to be “spending too much”.
While disagreements are part of every relationship, a worrying third of couples say they’re incompatible with their partner when it comes to spending and saving. And a quarter considers their partner to be irresponsible with money.
How you handle finances now affects your long-term plans, so finding a way to create financial harmony as a couple is important. It can not only reduce arguments but mean you’re both working towards the same goals.
If money decisions can cause some friction in your relationship, here are seven tips that could help.
1. Make money topics a part of your normal conversation
Despite money playing a huge role in your life, the research found that couples often find it difficult to talk about finances.
Making money topics part of the conversation in your home is an important first step. Sometimes, disagreements may occur due to a misunderstanding that being more open can solve. In other cases, a conversation can help you understand your partner’s view so you can minimise financial challenges.
2. Be open about your financial situation
If you currently keep your finances largely separate from your partner, they may not be aware of your situation, and vice-versa.
Being open about debt, outgoings, and other areas of finance can mean you’re both in a better position to understand the financial decisions being made. It can also give you an insight into how your partner views money and where your differences may lie.
Understanding your partner’s financial situation is particularly important if you’ll be making a financial commitment with them, such as opening a joint account or taking out a mortgage.
3. Create a joint household budget
If you share household expenses, understanding how they will be split and what they will cover is important.
For some couples, simply splitting expenses 50-50 makes sense. For others, taking income differences into account may be better suited.
What’s important is that you find an option that works for you and create a plan that matches your needs. This may mean depositing a set amount into a joint account every month or each of you taking responsibility for different outgoings.
4. Give yourself and your partner a discretionary budget
How your partner spends money can be a cause of conflict, especially if you don’t agree with their purchases. If this is something you argue about within your relationship, giving yourself and your partner a set budget to use however you like can avoid this.
It means you can both indulge in what’s important to you while knowing that you’ll still be on track to cover essentials and other financial goals you may have.
5. Set out clear saving and investing goals
With a day-to-day budget organised, it’s time to start thinking about other goals you may want to set aside money for. This could be to buy a house, start a family, go on holiday, or build a financial safety net.
Having clear saving or investing goals means you're both working towards the same things.
Knowing that you both need to put money away at the beginning of the month means you know where you stand, and it can minimise arguments.
6. Don’t overlook long-term goals
Saving goals looking ahead for the next few years are important, as are ones that will affect your life in several decades.
The sooner you start thinking about areas like retirement planning, even if it seems a long time away, the more manageable your goals will be.
If you haven’t discussed how much you and your partner are putting away in your pension each month, for example, it can be difficult to calculate if you’re on track for a financially secure future as a couple.
So, when setting out a budget and what you want your future to look like, don’t put off long-term planning.
7. Work with a financial planner
Balancing different goals and views on money can be a challenge. By working with a financial planner, you can create a plan that you can both have confidence in and incorporates both of your aspirations to provide long-term security.
The financial planning process can help make sure you’re both on the same page, from discussing what your long-term goals are to reviewing your risk profile when investing. These steps can mean your financial decisions reflect what you both want from life with a clear blueprint to follow.
If you’d like to arrange a meeting with us, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.