For better, for worse: Seven couples on how they navigate their finances
Arguments over money can destroy even the strongest of relationships. The stress of going into debt, rows over spending and worries about how to make ends meet all put a tremendous strain on couples.
Honesty and communication may be cited as the key ingredients to a successful marriage, but a survey from the Money Advice Service reveals almost half of couples aren’t always up front about how much they earn and their spending habits.
One in five people admitted to hiding debts from their partners, while 13% confessed to having a secret stash of cash. Unsurprisingly, given this level of deceit, the average couple has almost 40 rows about money every year.
According to psychologist Corinne Sweet, author of Stop Fighting About Money, it’s the number one cause of arguments. “It’s still a taboo subject, but people make a mistake in not talking about it when they get together,” she says.
The golden rule if you want a relationship to work, she insists, is being open about finances from the start. “We think it’s not only about money, it’s about power, control and who is in charge of the relationship,” she says. “Once one of you begins to feel resentful about the other, it’s the kiss of death to the relationship.”
So how should you run your financial affairs? Is it best to keep your money in separate accounts or should you have a joint account? Do you need to divide outgoings between you? Should one partner take control? What about longer-term savings?
The good news is there’s no right or wrong way – as long as both people understand how it works, what they’re responsible for and what they can spend.
Patrick Connolly, a certified financial planner at Chase de Vere, says: “Ideally, couples should agree when they move in together whether accounts will be in single or joint names and from which accounts bills will be paid and money can be spent,” he says. “The biggest mistake is a lack of communication in this area.”
“We agree not to get into debt”
Natale and Kevin Gowen have been married for 20 years and believe in combining their finances. They bring in £25,000 between them – Natalie, 41, is a part-time veterinary nurse and Kevin, 44, works in a bank. They have two teenage daughters.
“We have a joint account into which both of our wages are paid and all our bills come out of it as well,” says Natalie. “We wouldn’t have it any other way as we both know exactly where we are, how much money we have got and where everything is going,” she says.
“The only issue is if we ever want to buy a surprise gift for each other, we can both see what is coming in and out of the account – other than that it’s great.” As both are against taking out loans, expensive items are only bought if the cash is available.
“It’s not good getting into debt or buying things you can’t afford,” says Natalie. “We’ve never had a loan, so if we want to buy a car or pay for a holiday we only do so if we have enough money for it. If we use a credit card, we pay it off in full the next month.”
They save any spare money into an individual savings account (Isa). Although it’s in Natalie’s name, it’s acknowledged that the money is for them both.
"Finances should be open, so we pay everything into a joint account."
Sam and Graham Coffey have a joint account into which their salaries are paid each month. Sam, 47, earns £34,000 as a college lecturer, while Graham, 48, is on £22,000 as a local government trainer.
“As with all things in a relationship, finances should be open and equal, based on trust, so why not have a joint account?” says Sam. All the household bills come out of their joint account via direct debit, with the couple discussing what to do with anything that remains.
She says it’s important to monitor the bank account together at the end of each month to make sure everything is in order. “We also have a joint credit card that we use to buy everything during the month, such as shopping, petrol and other purchases,” says Sam. “We pay that off by direct debit at the end of the month, so as not to incur charges but benefit from the points we earn.”
Both look for ways to make savings through comparison websites and pushing companies for better deals. “I have always lived on the basis that if you can’t afford it, you don’t buy it,” says Sam. “I only ever use a credit card if I can pay it all off monthly and have almost never had anything on hire purchase.”
"It’s easy to keep our finances separate”
Liz Veness and Mark Robinson have been together for three years. Liz, 46, earns £37,000 as a property lawyer, while Mark, 54, is a commission-based estate agent earning between £30,000 and £40,000 a year. Since moving in together, they have chosen to keep their finances completely separate.
“We divide all household expenditure by a 50/50 split, including the mortgage and bills,” says Liz. “Any money that is left over is individually ours to do as we please – either saved or spent.”
They usually take it in turns to pay when they go out or give the other one half the money beforehand. “This works well for us as we both have independent finances and will
spend our money on what we want without questioning each other,” she says.
As a result, they have separate bank and savings accounts. The fact they earn similar amounts is helpful.
“It was easy to keep our finances separate, although we believe that it depends on what stage of your life you are in, your relationship, your financial position before you start living together and any outstanding financial commitments,” says Liz.
She agrees that discussing finances is the key to success. “We believe that finances are usually dealt with fairly by applying the ratio of what you earn, but it’s not always that simple,” she says. “There is no right or wrong way, so before moving in together it’s prudent to have that conversation.”
“We haven’t combined money that was in our names before we met”
Debbie Judd, 58, has been married to 59-year-old Ian for almost seven years. They live on his engineer’s salary of around £65,000 a year, while she focuses on running her community project Neighbourworks (Neighbourworks.co.uk).
As they both have children from previous relationships, the couple keep some aspects of their finances separate. “We both had lives before we came together, so there’s a little bit about our financial underpinnings that we haven’t combined, such as inheritances, land and even property, that was in our names before we met,” explains Debbie.
Everything else is jointly held. “We’ve always had combined banking and savings accounts,” she says. “We also make financial decisions about wills and investments together, although we don’t manage our money in a complicated way.”
Ian will generally take charge of day-to- day financial matters. “He manages the money and we pay all our bills electronically,” says Debbie. “We have one current account, but Ian has also set up separate accounts for retirement, travel and general purpose. He’s very good at investing and keeping track of money.”
Debbie believes that making sure you discuss everything to do with your debts and savings is essential to a happy life together. “You hear about problems in relationships where couples argue over finances, but I don’t understand it,” she says. “We’ve never had an argument over money and that’s because we have clear communication and common goals.”
“As the main breadwinner, I make the decisions”
Alex Davies, 40, takes the lead role in holding the family purse strings.
Married to Montse, 38, they have a three-year-old daughter, Sofia. But having built a successful career in financial services, Alex now earns a comfortable six-figure salary courtesy of his investments, a share portfolio and a number of buy-to- let properties.
“I make all the decisions in terms of where we invest and save and, increasingly, I have been making the most of our tax allowances,” he says. “Especially with tax hikes coming next year, I have been putting a large chunk of shares in my wife’s name.”
Although he’s the main breadwinner of the family, Alex insists Montse is involved in everything. “My wife runs her own business arranging language courses for foreign students, and I will discuss all financial plans with her,” he says. “She’s actively involved in our investments and when we shop around for the best deals.”
Alex has set up Wealth Club (Wealthclub.co.uk), a new investment service for high-net-worth individuals that specialises in various tax-efficient vehicles. Previously, he was a director of financial firm Hargreaves Lansdown, where he worked for 15 years.
He insists keeping on track of their finances is crucial. “We look to switch savings accounts every six months in order to take advantage of the best rates,” he says. “A lot of our decisions are also dictated by tax-planning concerns.”
“We run a joint account alongside personal accounts”
Seren Matthews, 29, and 36-year- old Martyn Haigh both work as android programmers. They have a joint account for the household bills, but their own personal current and savings accounts. This balance, they insist, works very well. “We split everything equally, the mortgage, bills, food shopping and dinner,” explains Seren.
“In the past, we didn’t have a joint account and we found that everything was very disorganised.”
However, dividing everything up can make it tricky to keep track of outgoings. “One of us may pay for something from our personal account, but it’s no big deal and evens itself out or that person takes the equivalent from the joint account,” she says.
One of the most important lessons they’ve learnt is to be realistic about outgoings, as it’s very easy to underestimate the amount you are spending. “Set aside a date every few months to go through your accounts, attribute outgoings to a different column type and then add it up,” says Seren. “You may be surprised how much you are spending. The last time we did this, we realised we were spending over £100 a month on takeaways.”
As well getting a banking app installed on your phone to make it easier to keep track of money, Seren advises couples to put savings into a separate account as soon as their salaries get paid into the bank.
“Arrange for all your bills to come out a few days after you get paid. That way, you’ll always know you can pay them and how much disposable income you have for the rest of the month,” she says. “The amounts you put in to the joint account each month should also have a buffer added for bigger purchases such as furniture and the vet’s bills.”
“The account is in my name, but we both put money in”
Lauren Farmer and Lloyd Evans know it’s important that the bills get paid, but they also like to have financial freedom. Lauren, 27, who earns £27,000 a year working for her local council and Lloyd, also 27, who is on £36,000 at a scrap-metal dealer, also have a six-month-old baby, Isla.
The couple contributes to one account for essentials. “This account is in my name, but we both put money in to cover the bills,” explains Lauren. “Lloyd puts in more as he’s on a higher wage, but everything comes out of that account, such as the mortgage, council tax, utility bills and food.”
In addition, they have their own current and savings accounts, while Lauren also has a credit card that they both use and belongs to sites such as Topcashback.co.uk, to earn money back on their shopping. “Everything we’ve got left after paying our bills is our own money that we can use how we like,” she adds.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.