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How to Manage Money as a Couple
Managing money can be one of the most stressful aspects of a relationship. In the past, people got married and combined both of their finances into a one joint bank account. However, nowadays many couples choose to keep their money separate, this is due to record amounts of student debt & not just one person in the couple being the sole breadwinner.
It’s important to note that there is no right or wrong way of managing money as a couple, you may choose to combine all your money together, set up a joint account for bills or keep your money completely separate. It will all depend on your attitudes towards money.
It is essential you and your partner sit down and chat about money as soon as possible and make it a normal conversation. This means that when any financial issues arise you will have no problem dealing with is head on and making decisions.
Sadly, recent figures have shown that 8.3 million people in the UK are in debt and 1 in 7 have hidden their money problems from their partners. Keeping things from your partner, especially when it comes to debt is not healthy for your relationship. So, with this in mind, we have put together the best ways to manage money as a couple.
Communicate about the current state of your finances
When you first decide to start managing money as a couple, it is essential you down and discuss your current financial position and spending habits. You should share your income, any outstanding loans or credit card balances you may have and any future money goals you have, such as when you want to buy a house or any investments you plan to make.
Being transparent and open about each other’s finances, and how you feel money should be handled ensures there are no nasty surprises in the future and will hopefully keep the arguments to a minimum!
Know your expenses
It can be a shock going from spending for one compared to a couple – especially on your weekly food shop! Not being prepared for this sudden increase in expense can cause arguments when you are trying to set your monthly budget.
The best way to get an understanding of your monthly spending is to both pull a month worth of bank statements to get a realistic picture of your expenses.
To get you started, have a look at this budget calculator to give yourself an idea of your financial position. Fill in all your monthly income and outgoings, and it will estimate how much money you have left over based on your figures. The more accurate you are with the figures you put in, the more accurate the estimate will be.
Create a joint budget
Budgeting is one of the most useful things you can do when trying to organise money as it highlights where you are overspending and where you can make cutbacks. All those small card transactions add up!
Deciding together how much you can afford to spend on day-to-day activities such as food shopping, takeaways, travel etc will not only help you stay on top of your savings, it can also prevent arguments over money as you are able to plan in advance what you will be spending money on.
Keeping an open and honest dialogue about your finances makes it easier when difficult financial situations arise.
Set financial goals/money vision
As a couple set financial goals and create a money vision. This allows you to set out a clear focus on what you would like to achieve financially in the long term. Making plans together towards big investments like a house, a once in a lifetime trip or even retirement can help strengthen your relationship.
One way to stay on top of your money vision is to use money management apps and budgeting tools. They make setting and maintaining savings goals easier than ever.
Consider having separate bank accounts & a shared account for bills
When deciding to share your finances opening a joint bank account is a good idea. However, many people don’t like the idea of giving control of their money to another person and sharing all your money can lead to arguments.
A good option is to open one shared bank account that your bills will be paid out of and keep your own personal account for income you would spend on just yourself. This allows you to be open about money and share financial responsibility as well as retaining control over your own finances.
If you choose not to have a joint bank account for paying bills, a good tip for couples is to discuss who will pay what and share the responsibility of paying the bills.
Sharing the load rather than just one person being responsible for ensuring all the bills are paid on time can reduce arguments as the pressure isn’t put on one person.
Have an emergency fund
As a couple, you should build an emergency fund for a rainy day. They are an essential buffer for when something unexpected happens. Your emergency fund doesn’t have to be thousands of pounds but just enough to cover unforeseen bills, boiler breakdowns, car repairs etc.
Most finance experts recommend that you should have 3-6 months of expenses saved in your emergency fund. If both of you have a steady income coming in, that can decrease the size of your emergency fund.
Overall being open and honest about your finances with your partner is essential to maintaining a successful relationship. If you or your partner are worried about money and need some advice, speak to one of our advisers on 0808 2085 195.