Money Conversations To Have Before Settling Down With Someone
Getting ready to take the next step in your relationship, whether it’s moving in together, buying a property or even getting engaged, is an exciting time for a couple. However, with these milestones come inevitable conversations about money, which – let’s face it – can sometimes feel a little awkward, especially if there’s a disparity in earnings.
It does, however, seem that talking about money and your financial situation with your partner is more important than ever. Indeed, according to Experian over half of UK couples admit they feel friction in their relationships because of the cost of living crisis.
Delving into your earnings, debts or savings over a glass of Pinot Noir might be one of the less romantic aspects of a relationship but being open and honest about your finances will be beneficial in the long run – and hopefully save any shockers later down the line.
Want to know how to broach those awkward topics? Pearl Akintola, Consumer Finance Expert at Experian, and the experts at Your Juno, have shared the key conversations you should have about money before taking your relationship to the next level.
Salary – How much do you earn?
“As a society, we’ve been trained to keep our salary a secret. While it might feel uncomfortable at first, discussing your salary with your partner is so important. This will not only help build financial trust between you, but it also offers you a better understanding of each other’s wider financial situations. It will also help avoid other awkward conversations such as ‘how much can you spend on our next holiday?’.”
Debt – Do you have any debt the other should be aware of?
“Before reaching a major milestone in a relationship such as getting married, moving in together or having a child you should let your partner know about any existing debt as soon as possible. Remember people get into debt for lots of different reasons – they might have chosen to take out a loan to further their education or lease a car to help employment prospects. Discussing debt shouldn’t feel uncomfortable, especially if you have a plan for paying it off. Together you can research and talk through the best financial options. For example, it might be worth switching to a balance transfer card to consolidate any existing credit card debt, as they can help you reduce the interest that you pay, giving you the opportunity to repay money owed sooner.”
Saving – Do you have any savings?
“Are you a saver or a spender? Everyone’s attitudes are different and while you might have a strong opinion on the topic, your partner might not. One person might already be saving for retirement, while the other is living day to day. If you want to make saving a priority, or help your partner do the same, suggest setting a joint budget and sticking to it. This can cover anything from day-to-day living expenses to those related to having fun (don’t forget to allocate some money to spend on a date night too!). If you need a hand, most banks will offer automatic budgeting tools to make it less complicated and this will also allow you to save without thinking – so search for tools that suits you best.”
Goals and priorities – What are your future money goals?
“Spending habits can be a bone of contention – especially when it comes to a couple’s long term financial goals, like saving for a new car or deposit, or even securing a mortgage. Firstly, it’s important to understand each other’s ambitions to ensure you’re on the same page about your financial future. For many, the first ‘test’ will come when they’re looking to buy their first property. In this instance, you need to have a conversation to ensure there’s a clear and realistic plan to make it feel more achievable. Calculate how much you need to save and check how much you can borrow towards your mortgage online. Just remember that honesty and openness is the best way to go about talking money.”
Credit Score – How does your credit score look?
“When in a relationship, the other person’s credit history can impact your future applications if you have linked up your finances by applying for credit together, such as taking out a joint mortgage. So it’s best that you both get in the habit of checking your credit score. This can be done for free from each of the three main credit reference agencies, including Experian, and it can be done in minutes by signing up with them directly, through the website or app. Once you have access, review the information on your credit report and make sure it reflects the facts. If one of you has a lower credit score look at ways to improve it by using a service such as Experian Boost, which gives people the opportunity to increase their scores by 101 points by taking into consideration monthly repayments to subscription services (yes, your Netflix and chill nights could actually help improve your credit score!).”
What does having money mean to you?
“This will uncover how money motivates them. Is money about building wealth or simply about being in a position where they can support their family? Does it mean financial freedom, security – the chance to open new doors – a vehicle for change? If one of you likes the idea of having a safety net this might mean having a large emergency fund. For the other, money might be about creating a positive impact in the world and investing in startups. Try listening to your partner with an open mind.”
How did your parents treat money when you were a kid?
“Remember these childhood beliefs could still influence them now. A person’s background builds their money scripts in the future. Maybe they have a very healthy relationship with money thanks to their parents? Maybe they want to do the exact opposite of what their parents did. Opening up about the past can shape the way you navigate the future.
What’s your biggest money regret?
“Their answer and any other insight from this will be into whether this has created a saver’s mindset, anxiety around money or they might say they try not to think about it – money avoidance alert! ”