Sharing your financial lives

People can have very different views about money and it’s important you both know where your other half is coming from. You won’t necessarily find a middle ground over everything, but the more you can understand, the better your chances of avoiding conflict in future. It can also help you make better decisions.

You could start by discussing your financial goals for the next few years and whatever plans you have for the long term. Then, look at what you can do now to help make them possible. In particular, will you have a joint account for paying the bills? Will you set up shared savings to fund shorter-term goals, such as a holiday or new car?

If you want to get into more detail, it’s a great idea to look at what you both have coming in and going out.

This can be the foundation for you to work out who will pay what bills. Alternatively, if you’re combining your finances, you can think about what a realistic monthly budget could be for each of you.

You can also make plans for what you’ll do with any extra cash. An emergency fund can be a very good idea, as it may make life a lot less stressful. It’s often suggested that three months’ living expenses is a good level to aim for.

However, you might also want to pay down debt, particularly if it’s expensive, or find a way to make it more affordable.

It may take a while to clear debts and create an emergency fund, but it’s still worth talking now about what you’ll do with your savings once it has happened.

You might like to consider an ISA, for example. It has some valuable tax benefits that can help you make the most of your money, particularly if you are investing in stocks and bonds.

Obviously, this is a big step up if you’ve only kept your money in cash up to now, but it can give you the potential for significantly greater growth over the years. That said, there are no guarantees with investments. They can fall in value as well as rise, so you may get back less than you invest.

This is why we would normally suggest you should plan to invest for at least five years if you’re putting your money in the stock market. You can find out more about ISAs and investing in this handy guide.

We know this is the tricky one. Retirement is probably years away – decades even – and there’s so much you want to do in the meantime. Also, planning for it can be a bit boring.

This is all true. But it’s still worth acting now. For a start, it gives you more time to build up your savings. Putting aside a little each year really can add up when you’re doing it for a long time, particularly as you can aim to benefit from the long-term growth potential of the stock market.

If you put money in every month, you’ll find you get used to it pretty quickly – and if you have a workplace pension, your employer may match your contributions, so your savings grow faster.
Even if you have to sort your own savings (with something like a self-invested personal pension), you’ll benefit from tax perks. Anything you invest will get boosted by 25% thanks to basic rate tax relief and if you pay higher or additional rate tax, you can reclaim even more through your tax return. Find out more about tax relief.

It’s also worth keeping in mind that in 20 or 30 years’ time, you probably won’t remember many of things you spend your money on during the next six months – but you will absolutely remember any money you put in your retirement savings, as they will be significantly more important to you in the future than they are now.

We’ll keep this short, as tax does tend to feel taxing, even if the Government claims it isn’t. When you get married, there are some potential tax breaks, such as the Marriage Allowance (which applies to same-sex couples who are civil partners) and the ability to transfer assets free of capital gains tax. In addition, you each have your own ISA and pension allowances, so you can potentially put more savings out of the taxman’s reach.

We don’t want to end on a low note, but things don’t always work out quite as people hope. The best way to look after your loved ones in this situation is to make sure you already have plans in place.

If one of you has health insurance, you could consider adding your other half to it – though this depends on cost and benefits, so it’s not always a straightforward decision. You may also want to set up life assurance, particularly if you’re buying a house or planning to start a family, and other insurances, such as critical illness, may be worth looking at.

After you start a pension, make sure you let them know who your beneficiaries would be. This is often done using an ‘Expression of Wish’ form.

Finally, think about a will if you don’t already have one. You can download templates from the internet if you want to do it yourself – though it will still need to be signed, dated and witnessed – or you can use a solicitor. Many will have fixed fees for this work and they can be surprisingly affordable if you want something simple.

Just as a side note, but if you already have a will, don’t forget to update it. This may sound obvious, but it’s easy to let it slip when you have lots of things to sort out.