Financial Planning For Couples Before Children

Financial Planning For Couples Before Children

Posted on Posted in Finance, Money, Savings

With summer holidays just around the corner you may be busy creating grand plans for a romantic break. Yet with 62% of people reporting that money concerns are the primary cause of relationship strain, it may well pay dividends to tackle the sticky topic of financial planning.

Sure, it’s not a dozen red roses. But it can be the difference between happily ever after and financial hardships that break even the strongest of relationships.

3 Staggering stats to inspire you to financially plan together

Financial Planning. It’s not the most exciting of subjects, nor the most romantic. However, as the following stats show, it can very much be the stuff of relationship woes if not tackled.

  1. Almost one third of adults in the UK have found a partner to have been in serious debt
  2. One in five have explicitly hidden their debts from their partner;
  3. Financial or money worries is the third most common reason for divorce, following unreasonable behaviour and mid-life crisis.

Three key financial topics to tackle

  1. Joint savings

Discussing savings is particularly important for future financial security and the meeting of those big bills in the future (such as having children, buying a home or getting married) – think not of it as talking interest rates, minimum investment terms and attitude to risk, but instead as planning for a future filled with exciting, but expensive, events.

Key to building up a savings balance is to not set unattainable goals – instead of transferring big amounts on pay day, opt instead for smaller payments that are sent into an account that can’t be touched for a certain time. That way you’re not feeling the hit come month end, and you aren’t tempted to transfer money out come that rainy day.

  1. Joint bank accounts

Talking about joint bank accounts is, it seems, something that two thirds of us either avoid, or choose not to do, with only 34% of UK married and co-habiting couples choosing to commit to a shared bank account.

However with that said, joint finances are a different thing entirely, as sharing a life together means sharing bills, big purchases and debt, regardless of whether you have a joint bank account or not.

As a couple you must sit down and lay your cards on the table – write down all that you owe and put together a breakdown of your incomings, versus your outgoings. It’s only through having a complete picture such as this that you can then plan ahead to pay off your debts.

Making over your bank balance before children

With 53% of mothers stating that they’d built up debt within the first fledgling months of their baby’s life, and with a quarter turning to credit cards and 23% to their overdrafts, what should be a happy time can quickly transform into a financial crisis (Bounty 2010). It’s then vital to prepare your finances in good time, and transition from living in the red, to slowly building up a bank account surplus that is decidedly in the black.

  1. Life Insurance

Life insurance may well make for one of the most drastically under discussed or considered financial topics of all. People simply don’t like to talk about it, and discussing our inevitable mortality is probably as far from an aphrodisiac as you can possibly get. Yet with the average cost of life insurance coming in at only a few pounds, the most painful part of life insurance is not the policy price, but the conversation. What’s more with pay-outs that average at £51,500, there’s even further financial reason for purchasing this essential back up plan should the worst happen.

This becomes ever more important once children come along, however this equally makes for unhappy reading as a third of parents neglect to take out cover.

If you or your partner would like to setup a financial plan, our professional financial planners can help you plan together.

The financial conduct authority does not regulate wills, taxation and trust advice.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments can go down as well as up and you may not get back the amount invested.