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Sharing the love: Understanding joint finances

accepted for loanManaging your money together when you’re in a serious relationship can be tricky business. In fact, one of the biggest problems in most relationships comes down to money – more specifically; communication about money. While money can’t buy love – it can tear it apart. So, here is your guide to understanding your joint finances and taking a healthy approach to money when in a relationship.

The Office of National Statistics (ONS) found 62% of adults claimed that money was the leading cause for problems in their relationship* – so, it’s important to get your joint finances just right.

Communication is key

While none of us particularly love talking about money, it’s vital that you talk finance with your partner. Here are the four crucial subjects to discuss in order to understand what you both want:

  1. Your relationship goals – this is important to understand whether marriage, buying a house or having a baby is on the horizon as each one will need to be saved for.
  2. Your current financial situation – you should both sit down together and work out what money you owe out, any savings or assets. Try to work out how you can reduce spending and pay off debts you owe.
  3. Attitudes to spending – you both should work out whether you’re each a spender or a saver. Understanding how your partner sees money will help with future financial plans.
  4. The one in control – a decision should be made as to who handles the finances in the relationship. For example, will one person look after the rent/mortgage while the other looks after the utility bills? You should be sure that you are both happy with this decision.

Around 24% of cohabiting couples and 53% of married couples pool their money together while 31% of cohabiting and 12% of married couples keep their finances separate**. Whatever you choose to do in your relationship, it’s important that it not only works for you but that you are both happy with the situation.

Do finance together

Now, if you’re really serious about sharing your finances, it’s time to do things together. To begin with you should use both names on everything you can, as this will ensure that everything is as equal as possible. Moreover, this should also be the case for joint assets as it will give you both power over it and make you both responsible for the debt.

However, you should always be careful about putting your name or signature on any loan that will only benefit your partner.

Try to share costs where you can. For example, if you have health insurance, many companies will give you a discount if you do this together. Car insurance policies often work in the same way, so ensure that you shop around for the best deal.

Be sure to work together on your household budget as this will inform both of you how much you can spend on a monthly basis. It’s also recommended that you make a will – this grows in importance as you get older.

Know the facts

Sharing finances can be pretty scary and it’s important not to be blinded by love, so take precautions and don’t be naive. Here are some quick facts that you may not be aware of:

  • A joint loan does not mean that you are only liable for half the debt. If your partner defaults you could be liable for the entire amount – including; fees, charges and of course, interest.
  • If any bills such as your gas and electricity are only in your name; that means that you are solely responsible for ensuring these bills get paid. It is safer for both names to be on the account to ensure that you are both liable.
  • You should also think carefully before you act as a guarantor for a loan for your partner or even family members. If things go wrong; you could be liable to pay the entire loan back to the lender.
  • Refrain from being ignorant! Do not sign any papers or contracts that you do not wholly understand and never do this because your partner has said so. Just because you may not completely understand something, doesn’t make you any less liable for paying the money back.

Protect yourself

More and more of us are opting for a prenuptial agreement when entering marriage or a civil partnership as a means of protecting ourselves. A prenuptial agreement is a legally binding contract that means your partner cannot make a claim against you if you have investments, a business or a family inheritance.

However, it is important to note that if you or your partner is considering a prenuptial agreement that you both seek legal advice.

When in a relationship, it pays to go into love and money with your eyes wide open so, it is vital that you are prepared for all situations. The best advice you can have regarding joint finances is to ensure clear communication at all times. That ensures all parties are aware of their responsibilities and what is expected of them. Since an application will consider both credit scores, the combined score could be significantly higher than a single one – a major benefit for those who may feel they are struggling with credit.


* Daily Mail report on finances, February 2015 https://www.dailymail.co.uk/news/article-2950658/Money-worries-bigger-strain-relationships-AFFAIR-according-study-nation-s-happiness.html

** Article on The Couple Connection drawing on data from YouGov and National Statistics https://thecoupleconnection.net/articles/did-you-know-this-about-money

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