Who wears the trousers when it comes to making financial decisions?
Surprisingly, a new survey by The Share Centre has found that UK women are in control of domestic finances – with well over half of female investors saying they take the lead in investment decisions too.
But they found that although 60% of women take the lead in their relationships for financial decisions, 1 in 3 admit not having confidence because they don’t feel they know enough about financial issues.
Things are easier if couples make the financial decisions together – and follow some basic principles.
Plan financial decisions together
Communication about money can be a real sticking point for many people. It’s a good start if you talk about the financial goals you share. Talking about what’s important in life can lead to talk about your budget: debts, cash management, emergency funds, insurance protection, retirement savings and more.
What are your long terms goals as a couple? Retiring early and enjoying life? University for children or even buying your home can take years of planning and disciplined saving.
Working together can make it easier to find the answers you need, and by having a shared approach to financial matters and retirement planning, you’ll both feel more secure and satisfied with your finances.
Accumulating wealth with savings
Building up savings is a something most of us want to do – but for many couples, there are plenty of other demands on resources.
It’s true that savings can look unrewarding with interests so low. Even so, getting the saving habit is still worthwhile, and by putting a fixed sum away each month, you really will find that your nest egg is growing surprisingly quickly.
The new Saving Allowances will protect the first £1000 of interest you make from the taxman, helping your savings grow faster. Even better take out a Cash ISA and your savings will grow a little faster, because the taxman will not be able to take a share.
Once you have built up a reserve of cash, you might want to consider investments. These can be confusing at first, but there are solutions that are ideal for first timers, which can make investing much simpler than you think – but you should certainly seek professional advice first.
Planning for a rainy day
Of course, even if you are trying your hand at investment, you still need to keep a grip on the essentials – such as keeping a reserve of cash to deal with emergencies. Things like illness, home repair or employment changes can occur at any time. Having a reserve of cash – three to six months of income in a savings account you can access easily makes good sense. Remember, it can still be working to earn you interest and build your nest egg.
As a couple with a double income coming in things seem can seem rosy, but if children come along it may be difficult for you both to work. This doesn’t simply mean less money coming in, it means an added risk if the breadwinner loses his or her job, or becomes too ill to work.
Every couple should consider Life Assurance, of course. But you should also consider Income Protection Insurance. It is a long term insurance policy to help you if you can’t work because you’re ill or injured. It pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner. It covers most illnesses that leave you unable to work, either in the short or long term (depending on the type of policy and its definition of incapacity).
Critical Illness Cover could also be part of your overall protection plan. It pays out in the event of specified severe illnesses.
Planning a pension
A State Pension may not be enough to live on when the time comes. A standard workplace pension might not be as generous as you might like. If you want to enjoy your golden years as a couple, you can’t afford to leave things to chance.
It makes sense to look at all the possibilities, including private pensions and perhaps a Lifetime ISA. Retirement can seem a long way off when you are just starting out as a couple – but if you don’t start preparing it may never come because you won’t be able to afford to retire at all.
Getting some help
Whoever makes the financial decisions, it makes sense to get advice from experts who understand the challenges as well as the possibilities. When you need help with your personal finances, our professional team can help you to explore your options and develop a plan right for you.
The value of investments can go down as well as up and you may not get back the amount invested.
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 financial conduct authority does not regulate wills, taxation and trust advice.