Disagreements about money can be a sure-fire way to add stress to any relationship because it can have such an impact on day to day life. With this in mind here are 5 things couples can do to reduce money stress and live a more harmonious life.
1. Talk openly about money
You should both know your household income, expenditure and the level of any assets or debts. Having secret accounts or money tucked away does nothing to build trust.
Explore your beliefs and attitudes about money and ensure that if some things are ‘deal breakers’ you know upfront what these are, this may include your views on lending money to family / friends, whether to save for a car or put it on finance and the use of credit cards for non-emergency spending.
2. Have a common dream and plan to make it happen
Set financial goals together and discuss what you both want short and longer term. Do you want kids, if so when? Are you going to buy your own home at some point – if so where will you live, how much will it cost and when would you like it to happen – how will you raise the money for the deposit and buying fees?
Will you both be working outside the home – or will someone stay home to look after the house and any children that you have? Financially is that viable, or will you need to save up some money to live off during this period of non-work?
What type of investments do you wish to have, what’s your plan for getting them? Is there something in particular you would like to save for – dream holiday, kids’ university costs, motor home?
When do you want to retire? Where will your income come from? Will one of you retire earlier than the other?
3. Use a budget planner
Know where you spend your money by keeping a track of spending for 1-3 months, use your debit card and write down all cash purchases so that you can look through your bank statements to check that your purchases are in line with your goals and dreams.
Using a budget planner is an easy way to do this – write down where your money actually goes and check that you are spending less than you earn each month. Don’t forget to add in the annual bills (car tax/insurance, holidays, Christmas presents) by dividing the annual amount by 12 and adding to the budget planner. Doing this can really highlight how you prioritise your money, and if there are unused gym memberships/Sky subscriptions that could be cancelled to free up money for something else.
4. Maintain equal control of the money
This may mean using a joint account, or having a bills account to which you both contribute and then you each having your own money to spend – but either way, you need to feel free to spend within your goals and budget and have the flexibility to make some purchases without the other person’s say so – this is especially important if one person earns more than the other or is not earning at all.
5. Estate Planning
Make sure that you write Wills and set up your estate so that the money goes where you choose in the most tax-efficient way upon your death. This may mean asking your Financial Adviser to help you put life assurance policies in trust, and the use of gifts to reduce your Inheritance Tax burden.
Make sure you have discussed funeral arrangements, and have some means to pay for them. If you don’t have sufficient savings, you may wish to consider a pre-paid funeral plan or a ‘whole of life’ assurance policy.