They say you should never mix love and money, but for most, they’re both building blocks in our lives. The two can clash; financial problems are one of the major causes of relationship break-up. So taking a little time to think about how you manage them can pay off.
As it’s Valentine’s week, I was asked to come up with my "love and money" rules for This Morning. As I’d done the thinking, I thought ’em worth bashing out here too.
1. Opposites may attract, but they shouldn’t have a joint bank account.
Many members of the older generation have completely joint finances, and I certainly am not going to preach to people who’ve successfully managed this for 40 years.
Yet these days, many new couples have spent a substantial period of time financially independent before they get together. Therefore, fusing finances together can cause rows.
This is especially pertinent if you’ve developed different money personalities. If one partner’s saving up for something, and the other spends that cash willy-nilly, you’re not in a good place. Far better to continue to independently manage your affairs but co-operate on the areas where the financial Venn diagram does overlap.
The classic example of that is to have a joint bills account – where each contributes to the pot of necessary expenses. The amounts contributed don’t have to be equal if your income and expenses aren’t (this fits well into my general piggybanking budgeting technique).
NB. People often ask me ‘what’s the best joint account?’ The answer’s simple, almost all accounts allow you to hold them jointly, so it’s the same as for a single person. See Top Savings and Top Bank Accounts.
2. Bad debt is more like an STI than a marriage.
You can be as lovestruck as Romeo and Juliet (and we all know how that ended), but what lenders care about is the financial products that link the two of you.
There are only two types of product which can be linked to your credit file; a joint bank account or a mortgage (joint credit cards don’t exist, just second cardholders). If you have one of these, it connects your credit files. So if you apply for credit, your partner’s finances are likely to be looked at too. Therefore, if one of you has bad credit, it can impact the other.
The reason I liken it to an STI is that if your relationship breaks down, separating or getting a divorce doesn’t make the linkage go away – problems can linger long after. The solution is to apply for a ‘notice of disassociation’, but only if your finances are truly separate. If you still have a house or joint finances, this won’t be granted. (Full help in my Boost Your Credit Rating guide).
In a nutshell, be very careful before getting any products with someone who has a bad credit history – no matter how much you love them! If you do want a joint account (for bills, for example) then make it a savings account where there’s no credit linkage (though you get less functionality).
3. Never let your partner look after the finances.
"My partner deals with all the finances – I haven’t got a clue." If this sounds like you, then alarm bells should be ringing (and if you’re the one who does the looking after, read this in reverse).
Let me be blunt. Imagine for a second the worst were to happen and your partner died or left you – this would leave you with untold financial disorganisation and grief on top of the misery.
While it’s common for one half of a couple to be better with money than the other, you both need to be involved. I suggest the ‘senior’ financial half creates a simple factsheet detailing all your products – savings, debts, energy providers, insurance, bank accounts and more (avoid noting down sensitive passwords though). This should then be kept up-to-date and somewhere safe, in case, heaven forbid, something happens.
It’s also worth arranging a budget and finance meeting across the kitchen table to discuss it at least every three months (or every week if your finances are in dire straits). This will diminish the risk of problems.
Budget meetings are also great for those who struggle, so discuss before you spend any money, as two have better discipline than one.
4. You CAN use a 2for1 voucher on the first date (and every date, in fact).
Worried about whipping out that crinkled up 2for1 restaurant voucher on a first date? Don’t be. Our Valentine’s poll of over 7,000 users shows being savvy is officially attractive!
The scenario was a man asks a woman out and says he’ll pay – but uses a 2for1 voucher.
30% said using a voucher was a good thing, it shows he’s a keeper.
56% say it’s not an issue.
14% say it’s tight and avoid.
So, if first-timers can do it, those in established relationships should relish it. If you want to go out and a voucher’s available, it’s far better to use that than to overpay, think what you could do with the cash saved.
See the latest restaurant vouchers, including for Valentine’s Day.
5. Trust pays in a relationship (and in your finances).
If you’re in a trusting relationship, you can use that to gain financially.
Savings: If you’re married or in a civil partnership, move any savings you have into the name of the lower rate taxpayer to maximise the interest payments. You can do this if you’re not married, but then there’s a minor risk of inheritance tax issues if one of you died and you have substantial assets. See Top Savings.
Double cashback gain. My top pick cashback card is the Amex Platinum Everyday, which pays new cardholders 5% cashback for the first three months on up to £2,000 spending.
If you’re in a couple, one of you can sign up to the account and get joint cards so you can both spend on it. Once the three months are up, get your partner to get a new card to keep the 5% for another three months. Remember to always REPAY IN FULL each month or it’s 19.9% representative APR.
Bank account boost. As the top bank accounts require a set amount of income, if you’ve each got that, you can marry together accounts to get the maximum perks.
For example, one of you can get a Santander 123 current account – which while it has a £2 a month fee, pays cashback on bills, eg, 3% on phones, 1% council tax, and 3% savings interest (if you’ve £3,000 to £20,000). Then whomever gets that should pay all the bills from it.
The other can then go and get an account such as First Direct‘s, which gives a £100 switching bonus, top rated service and a 0% £250 overdraft.
I’d love to read your money and relationship tips in the comment section below.