This is the third of three blog posts Mrs Moneypenny (Channel 4′s Superscrimpers) is writing for us, all about making better financial decisions in 2015 – @mrsmoneypennyft
So, you’ve met someone special. They share your taste in music, love sci-fi films, and have a lopsided smile that you find incredibly cute. But how much do they earn? How much have they borrowed and how much have they saved? What is their attitude and approach to money?
It seems a little harsh to be thinking about money when you have only just met, or even in the first few months of a relationship when the excitement far outweighs the practicalities. (He lives in Aberdeen? She works nights? No problem). But sharing financial goals and attitudes to money early in a relationship could be the most important decision you make.
So before you rush to close your bank account and open one with your new partner, make sure you talk about this. Money might be the new taboo, and there is no doubt that people feel happier talking about their sex lives than they do their finances, but Relate say it is one of the top ten reasons couples argue. Alvin Hall, who like me presents money programmes on TV, puts it more graphically “Money is more important than sex in making or breaking relationships. People can accommodate different sexual preferences more easily than differences over handling money.”
So, here is a checklist of the things to think about before you move from an emotional commitment to a financial one:
What is his/her attitude to money? Are they a scrimper or a spender? Knowing this can help you to forsee any problems in the future!
Should you have a joint bank account? I had to do this when I got married because my husband was a new immigrant – from Australia – but I would think twice about it now. If you are renting or buying property together the most convenient thing is probably to open a joint account, but keep your own accounts, and both set up standing orders to pay a regular amount of money in for the bills. It’s also important to remember that setting up a joint account creates a financial link which means that lenders may take your partner’s credit report into account when assessing any credit application you make.
What constitutes a shared bill? Agree about all the things that you will share the costs of. Some (utilities, council tax, light bulbs, groceries) might seem obvious but some are less so. I never watch Sky Sports or movies so why should I pay for half our TV subscription? And do my beauty treatments constitute a joint benefit (I know a girl in Paris who persuaded her husband that her beauty treatments were appreciated by him and so should be in their joint budget)
Big spending decisions – how big is big? For major purchases it would be best to agree a limit that you can spend alone, without discussing it with your partner.
Budgeting. I am well known for recommending that everyone spends an hour a week on their own finances. Knowing what expenses you have and how much you need to meet the bills each month is key to domestic harmony. Forewarned is forearmed!
Saving. If you are saving for a mortgage, do you know how much you need for the deposit? And therefore how much you have to save each month? Having your budget worked out, and knowing how much you both earn, is key to finding this out. Then think about opening a joint savings account which you’ll both need to sign.
Credit reports. Have you both looked at your credit reports recently? When you apply for credit together this creates a financial link so a lender will take both credit reports into account when considering your application. I know a young couple who are buying a house locally, and she now has to get the mortgage alone because after a lot of hard work and paperwork, he was declined. If they had looked at their credit reports before they applied, they would have realised it would have been better for her to apply alone in the first place. Even better, with a service like Experian Credit Expert you can take steps to manage and improve your Experian Credit Score so that you can both apply for a mortgage together in confidence. Just remember to give yourself enough time to do this, ideally allowing yourself up to a year to get your report in the best shape possible before applying. And while I am on this subject of credit reports, remember that if you have been involved with someone financially before, and no longer are, you may need to fill in a financial disassociation form.
Finally, don’t make it all about scrimping and saving. It’s important that you remember to treat yourself – and each other – at least once a year.