Professional Financial Advice...Free
Popular Money Doctor (John Lowe) advises couples with financial problems.
During your course you can ask us for John Lowe's Financial Fact-Find kindly provided for our "Together" course. (The Fact-Find forms will be issued to you only on request.) On completing your Fact-Find, you can seek a personal consultation (or a 20-minute phone-call) on any financial issues you wish to discuss. This valuable consultation which would normally cost 65 Euro is offered free, as part of the Together pre-marriage course. To sample John's realistic, down-to-earth style, see his article For Richer, For Poorer (financial advice for engaged couples, below) and his best-selling Money Doctor 2016 (available at a special rate, on our course).
by John Lowe
The big day is not far off. You have thought of everything or have you? Do you really know your partner – financially even? What can you do to address this whole area of finance?
In an ideal world, one should discuss money with a future partner before making any sort of commitment as this would allow you to check that you are financially compatible. However, we don’t live in an ideal world and so most couples will find themselves tackling financial issues after they have been together for some time. Looking on the bright side, maybe this is preferable. After all, you now know and understand each other better.
OPENING A DIALOGUE
The first and most important step for anyone in a relationship is to open a dialogue with their partner. If you don’t communicate, you won’t know what they are thinking, and they won’t know what you are thinking. My advice is to have a gentle discussion in which you discuss some or all of the following topics:
- Your individual values in relation to money. What do each of you think is important?
- Any assumptions either of you may have. One of you may assume that finances should always be joint, the other may have fixed ideas about keeping them separate.
- Your dreams and desires and your partner’s dreams and desires. How do you both envisage the future financially?
- Your fears and your partner’s fears. What are you both most worried about?
Both of you will have inherited traits and you need to recognise what they are before any sort of agreement can be reached between you.
ANYTHING TO DECLARE?
There are so many tricky areas when it comes to discussing personal finance with your partner, that it is hard to decide which is potentially the most controversial. One subject which never fails to cause problems is that of ‘secret debts’ and ‘secret savings’. By this I mean:
- One or both partners have borrowed money without telling the other one.
- One or both partners have tucked money away without telling the other one.
- Other ‘secrets’ which couples keep from each other include:
- How much one or other really earns.
- Money that one or the other has given away or promised (this often arises where one or other has been married before).
If you are harbouring a money secret from your partner, my advice is come clean. The longer you leave it, the worse it will be if you are discovered. Also, it is much harder (and sometimes impossible) to tackle your joint financial position if one of you is holding out.
Here are some tips:
- The longer you leave it, the worse it will be and the more chance that it will cause a serious rift.
- Pick your moment. No one likes to receive bad news just when they have to go to work or do something else. Better to raise the topic when you are alone and there is a chance to talk about it and before the wedding !
- If appropriate, don’t forget to say ‘sorry’.
- A medical doctor once told me that he always prepares family members for news about the death of a loved one a day or two before it is likely to happen with the words ‘I am afraid you should expect the worst’ – this gives them time to get used to the idea. If you start by saying you have a confession to make and it may shock or anger them, the conversation is unlikely to be as acrimonious.
- Don’t fool yourself that borrowing or spending money without telling your partner won’t upset them. But, equally, remember that it is only money. The important thing is that there should be honesty in your relationship.
BUILDING A JOINT APPROACH TO MONEY
Disagreements about personal finance can be very divisive – I have seen figures that suggest half of the couples who break up do so because of a disagreement about money. So when I say that you need to agree a joint financial strategy with your partner I don’t say it lightly. One approach that I have found works well is to:
- Look for common ground. It is likely, for instance, that you both want the same thing – to be free of debt and have plenty of spare cash.
- Communicate freely and honestly. Assess where you are and how each of you have contributed to the current state of affairs. Be honest. Discuss each of your strengths and weaknesses. The things you are doing right, and the things you are doing wrong.
- Compromise. Don’t allow past behaviour and events to poison your chance of success. Put grievances behind you. Start afresh and in doing so accept that you will both have to agree to do things differently in the future.
SHARE OUT THE CHORES
There are certain basic money chores that have to be done and one of the most useful things any couple can do in relation to their personal finances is agree who is going to take on which responsibilities. My recommendation is that all major decisions are made jointly and that each partner should keep the other informed about what they are doing. The tasks that need to be divided up include:
- paying household bills
- filing and organising financial paperwork
- doing the household shopping
- checking the bank accounts and reconciling the balances
- looking after the spending money and accessing cash
- shopping for larger purchases
- saving money ( so important ) and arranging any loans
- investment decisions
- keeping an eye on investments
- dealing with financial institutions, banks, insurance companies and so forth.
In many relationships, one or other partner will take over management for the financial affairs. Even where this works without a hitch, I feel it is not entirely a good idea. Supposing one of you should die unexpectedly – how would the other cope? Also, what happens if you go your separate ways at some point? I can’t stress how important it is to share information and decisions.
HOW TO MAKE YOURSELF FINANCIALLY COMPATIBLE
Here are some valuable tips on handling joint finances – whether with your partner or with someone else, such as a flatmate or friend.
- Maintain your independence. A joint account is perfect for joint responsibilities but it is a good idea to keep an account for yourself so that you have money available to spend as you want. Decide which areas are joint expenditure and which you are each going to handle alone.
- Decide together. If one half of a partnership takes over all the money management it can lead to big trouble. The person ‘in charge’ may end up resenting the fact that he or she is doing all the work… and he or she may also become controlling. The person not involved is leaving himself or herself vulnerable and is adopting an essentially childlike position. Both of you should take decisions together – even if one of you does the day-to-day accounting.
- Be honest about how you each feel. If one of you wants to save and the other wants to spend… admit it and work out a strategy that allows each of you to do as you please. Compromise!
- Plan for a future that isn’t completely dependent on staying together. I realise that this may seem pessimistic but I frequently find myself counselling people who unexpectedly find themselves having to deal with money for the first time.