How To Manage Finances in a Relationship
When you get caught up in the whirlwind of a new relationship, it’s easy to forget the mundane, practical aspects. We enjoy the dates and memories, and tend to cast aside the shared rent payments or weekly food shop bills. However, discussing finances in a relationship doesn’t have to be awkward; it’s a smart way to make sure you’re both in agreement and create healthy spending habits – together!
Why is it important to discuss finances in a relationship?
There are many things you may want to learn about your partner, but their finances usually aren’t one of them, at least initially. However, being open with each other regarding your financial situation is important because it can directly affect your spouse. First and foremost, make sure that you trust your partner and can see longevity in the relationship. Sharing financial information and responsibility is a big deal, and you must be certain.
When the time comes to reach milestones such as getting a mortgage or investing in joint projects, you will find that both of your financial histories are considered and can impact the outcome. Having an open and honest conversation about your financial position early on in a relationship will set expectations and help you to plan.
1. Have an open conversation
Start by sitting down together and laying out each of your financial histories, preferences and goals. This will allow you to continue whilst fully aware of each other’s standpoints on how to handle finances in a relationship. Helpful topics to discuss are:
- Outstanding loans or financial obligations
- Financial goals and objectives
- Managing joint payments and outgoings
- How to split finances in a relationship
The aim after this conversation is to have a better understanding of each other’s situation and how you each view finance in a relationship.
2. Set personal and financial goals
For anything from saving to buy a house to aiming to improve your credit scores, having clear goals will guide you on how to deal with finances in the relationship. For example, some people choose products designed to help build credit. Making repayments on time may help improve a credit score, while missed payments could harm it. Always check fees, interest, and suitability before applying for any new credit product. Once you have the goal, you can establish tangible, small steps to achieve it.
Picking a financial goal is a good place to start. Otherwise, it’s easy to get carried away and become overwhelmed. Once you know how manageable yours is, you can set more.
3. Create a savings plan
One in 6 UK adults – around 8.4 million people – have no savings, which will affect their financial capabilities. Whether it’s an emergency fund for necessities like car repairs or to invest in property, savings provide greater financial flexibility. Therefore, when discussing finances in a relationship, savings should be a priority.
Firstly, review your goals from above and decide what amount of money is needed to achieve those goals. From here, you can create a weekly, monthly, or yearly savings plan. Remember to keep it realistic to avoid unnecessary financial stress.
4. Open a joint account
Whilst you may think it important to have your individual accounts, a joint account could be helpful for mutual obligations such as:
- Bill payments
- Groceries
- Savings
- Holidays
Having a bank account in both of your names will could ensure that both parties are benefiting from controlling the finances. That being said, joint accounts also tie both parties together in terms of liability. Your credit files may also become linked, meaning if one partner has outstanding debt or repayment issues, it could affect the other’s ability to access credit.
Managing finance in a relationship with Evolution Money
If you’re already a homeowner and need support managing finances, you could check your eligibility for a secured loan with us. All applications are subject to affordability checks and property eligibility.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Need more advice on how to deal with finances in a relationship? Browse our FAQs section for more tips and helpful guides.
Sources
Information correct at time of writing. Figures and examples may change, please check official sources for the latest updates.
Money & Pensions Service – UK savings statistics
FCA – Financial Lives Survey
Representative 17.46% APRC (Variable)
For a typical loan of £23,120 over 120 months with a variable interest rate of 17.46% per annum, your monthly repayments would be £442.07. This includes a Product Fee of £2,312.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £53,047.80. Annual Interest Rates range between 8.6% to 27.87% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
