How to discuss finances with your partner
There’s a stereotype about us Brits that we don’t like to talk about our finances. Whether or not it is taboo in UK households, talking about money is an important part of life and something that needs to happen. For couples, it may seem like there isn’t a “right time” to bring up the subject of money, but if you have plans for the future sooner rather than later is best.
We spoke to Elisha Cooper and Dylan Brown, a couple in their twenties from Reading who have made talking about this work for them. The pair originally met at work, with Dylan saying, “We both started the same week and were in the same induction, but it still took me 18 months to pluck up the courage, despite dropping several, noticeable hints… I guess they weren’t that noticeable! Right now we are living together, making big plans and saving up for a deposit for our first home.”
So, what are the practical tips that you should follow to keep a healthy financial partnership like Elisha and Dylan? Here’s a good place to start:
The best way the pair have found for them to keep things accountable is to have an account for the day-to-day spending. Dylan says, “We have a joint bank account, joint savings, and joint credit cards – it just makes things easier for us as everything then comes out of one account.” As well as this, they move any left over money to a “rainy day fund” at the end of the month.
Have talks before splurging
Dylan says, “When it comes to ‘big’ purchases, I think we usually try to collectively agree on a purchase like that and how we would fund it (do we dip into savings, take out a 0% credit card or decide not to purchase it).” Some people prefer to have a spending threshold of £100 or £200, and any time either partner wants to buy something above that limit, you get together to choose whether or not it’s necessary and worthwhile.
Get serious with budgeting
Despite the fact they’re still young, Elisha and Dylan have got it sussed in terms of budgeting. They meal plan, bring lunches to work, use cashback sites, comparison sites, and take full advantage of reward points to make their necessary spending give back. Elisha also tells us “We are both also part of a local market research/focus group which is basically paid research and anything we make out of this we put towards savings for holidays and a house deposit.” Using tools like this will ensure more money is left for savings and the odd treat.
Communication is the biggest hurdle to overcome in regards to relationships and money. Our Family Finances report found that 18% of cohabiting couples argue about money on a weekly basis1. Elisha puts this down to lack of transparency:
If you haven’t been able to sit down and think about finances together in a formal conversation, then you are probably going to find that you argue about money.
Whether it’s due to embarrassment or shyness, lots of people don’t want to talk about previous debts with their partners. However, if you get married or buy a house further down the line this could be a speed bump, so it makes sense to be honest.
Elisha states, “We are very proactive and supportive of each other when it comes down to thinking about money – We know when an honest conversation is needed i.e. Elisha stop spending money on coffee at work and get a discounted top up card instead for the coffee place so we can save money!”
Having a conversation about spending habits and goals should happen at the same time you discuss the rest of the “serious” stuff. If you have big plans for the future you’ll need to think about how you’ll fund them, after all.
Circumstances change, which means your financial plans will need to as well. For example, as you get more committed, you may want to think about things like life insurance, income protection, and wills to protect your assets if the worst were to happen. Similarly, as jobs and responsibilities progress, new talks will need to happen. You might even want to choose a day every few months to keep budgets and plans in check.
Be strict… But not too strict
For Elisha and Dylan, while they stick to a budget there’s room for flexibility. For example, Dylan says “I wanted the new iPhone 7 when it came out – but there’s nothing wrong with my iPhone 6 so I just moved onto a cheaper contract, rather than spending more money… Elisha still had to have a new iPhone though.” Living your life scrutinising every penny would be very grim indeed. It’s really all about staying on track, and taking consideration when you do want to splurge a little.
Elisha’s advice to others is, “You’d be surprised how much more comfortable you will feel with each other in being able to talk about finances, how to manage them and goals and aspirations for the future. I personally find it much better knowing and having access to what we both spend so that we can pave our future together and understand how we can achieve it.”
The average cohabitee
Find out how other couples across the UK are managing their finances, with stats from our Family Finances Report.
A guide on multiple income streams
If you and your partner want to make some extra cash, read our handy manual on diversifying your earnings.