I was recently working on a Financial Plan with a couple who were planning to move in together and I could feel the awkwardness they were experiencing. After all, who wants to cloud romance with finance. The fact is “move in with me and so do your debts and bills”. It is a subject which feels uncomfortable to many because it has love, trust, money and their relationship all rolled into one.
So, I thought I’d give you my 5 top tips to couples’ finances.
- What are they bringing to the table? What is their financial style, are they a saver or a splurger? What is their belief about money? You may find you have different thoughts on money, which may impact on your future plans, especially if you discover a secret shoe or golfing fetish which takes up all your partner’s spare cash!
It is best to be honest with each other and set up a financial plan/monthly budget.
- Loans and debts. Do they have any outstanding debts, or loans, if so how much, as this may cause a bump or two on the road to financial happiness. Do they have a plan to pay these off and are they able to stick to the plan?
It is advisable to decide from the beginning which, if any, debts will become joint responsibility or remain that of the partner who originally incurred it.
- Do you know how much your partner earns? Do you and your partner know how much you earn individually?
Using this information it may be advisable to work out what percentage you will both contribute to the joint bills and living costs. For instance you may decide to split the cost of the bills equally or have a higher percentage paid by the higher earner.
- Joint or separate accounts; that is the question. Do you have a joint account and if not should you have a joint account to pay household bills?
One of the best ways to deal with joint finances is to agree a monthly amount to be put in a separate “joint budget” account. This should include surplus funds for emergencies and ad-hoc items. Set up a standing order to transfer the agreed amounts into the “joint budget” account. All the monthly bills should be set up on direct debit to come out of this account on a date after you are both paid.
- Contingency funds and joint purchases. Do you have any extra money or savings to deal with any “rainy day” issues? This is likely to cause unrest if something comes up and you don’t have the money to deal with it.
Opening a joint savings account and putting away an agreed amount or transferring surplus fund from the “joint budget “account can help. Also, remember to save a monthly amount in this account for annual bills.
Once you’ve considered these, it makes the road to domestic bliss much easier to travel!
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Written by Caroline Neita
I am a chartered banker with 20years+ accountancy experience in the Corporate world. I am passionate about accounting and love helping people to be in total control of their finances and clear their debts as quick as possible. I try to impart as much information that can help all of us to have better financial control and knowledge of what is out there to benefit us. My other passion is helping small business owners to completely understand their finances and progress their company. Finally I am doing what inspires, having found my niche, I am using all my years of experience and love every minute of it. I also take great pleasure in being creative, making crafts and interior styling . Put the 2 together and you get “creative accountancy”, but I always stay within the lines! 🙂