- Couples often have unequal incomes, so may need to rely on one another financially
- In 2024, men outearned their partner in seven out of ten couples that lived together, according to the ONS
- How your partner manages their money can have implications for your own finances when your money becomes intertwined
- Given that more than one in 20 direct debits to pay loans failed in August, joining your finances with someone prone to this kind of mistake can get expensive*
- If you split up, it can cause even more issues, and 35% of couples who married in 2005 had divorced by their 20th anniversary**
- Seven ways to protect your money in a relationship
Sarah Coles, head of personal finance at AJ Bell, comments:
“There’s never a great time for the first money conversation with a new partner. Too early and it feels mercenary, too late and there’s a risk you’ve already committed to someone who is hopeless with money.
“If you leave it too late, you may still decide to stick around because they’re not going to break your heart. However, you need to take steps to ensure they don’t break the bank either. There are seven risks to be aware of, and things you can do to protect yourself.
“Even with all these precautions, living with someone who is bad with money can be hard work. It helps to be clear on ground rules and red lines from the start. Things may go wrong, and it’s important to keep communications open, honest, calm and constructive, so they are prepared to share their difficulties and you can work towards solutions together.
- You may end up subsidising them
“In the early days, when you have separate living arrangements and finances, the main risk is that they manage their money poorly, and either borrow from you or ask you to cover their costs when you’re together.
How to protect yourself: “Lending money to a partner brings real complications. You need to consider what you’ll do if they don’t repay you, or if they ask for more. Similarly, consider whether you’re prepared to pay their way, and if so, under what circumstances and with what frequency. Don’t just fall into this habit without thinking it through.
- If you move in together, they could miss vital bills
“After moving in, their bad financial habits will have much more of an impact on you, so it needs careful thought. If they miss bills, you could end up covering them or running up debts. If it’s the rent or mortgage, you could lose your home. If they hide missed bills, you could be thousands of pounds in debt before you realise anything is wrong.
How to protect yourself: “Before they move in, work out what you’ll do if they miss bills. Can you afford to step in and cover the costs – and are you prepared to? You can set up an account for bills, and both set up direct debits to pay into it at the start of the month – before they have time to spend the money. This helps ensure bills are automatically paid, and it helps you see what’s going on, so problems don’t have time to build. However, it doesn’t protect you from someone whose finances are so bad that they don’t have enough money to fulfil the direct debit. It means you may also need a particularly robust emergency savings safety net.
- If you have a joint account or mortgage, their problems become yours
“With a joint account you’re jointly liable for debts, so your partner could run up an overdraft that you have to pay off. You are also both liable for the full mortgage payment, so if your partner doesn’t pay, you’ll have to cover it. In addition, getting a joint product will link your credit records. Once they’re linked, if they get into financial difficulties, it will affect your record, and could make it more difficult to borrow in future.
How to protect yourself: “Think twice before taking on any joint accounts. Even the bills account can be in your sole name if you prefer.
- They may not be able to build anything for the future
“If your partner is constantly trying to dig themselves out of a financial hole, they’re less likely to be able to save for the future – for anything from buying a house or getting married, to something more affordable like a holiday.
How to protect yourself: “You can build your own savings pots, whether you’re saving for a deposit on a property you’ll own the lion’s share of, or planning to go on holiday with a friend. You don’t need their money issues to dictate the rest of your life. However, consider what you’ll do if they ask you to dip into these savings to get them out of financial trouble.
- They may be reliant on you in retirement
“If they aren’t planning for their own retirement, they may need to rely on you. It could mean having to share your income, or you may have very different lifestyles when you stop work.
How to protect yourself: “You can’t force someone else to prepare for retirement, but you can have open conversations about the preparations you’re making, what you feel they should be doing, and how you plan to manage your finances in retirement if they fall short.
- In a divorce you could be liable for half their debts
“Divorce settlements start with the premise that things should be divided equally between you, so if you have all the savings and they have all the debts, you’ll share both.
How to protect yourself: “Before getting married, consider getting a prenuptial agreement, which will set out how things should be split on divorce. These aren’t binding in UK law, but they should be taken into consideration if you end up in court – as long as you both get independent legal advice.
- They may not be in a position to support children as they get older
“It may be up to you to get children on a firm financial footing when they start adult life, if your partner’s finances are too disorganised for them to consider it.
How to protect yourself: “Investing in a Junior ISA gives your money an opportunity to grow for the long term, and because the money is tied up until your child turns 18, and then belongs entirely to them, nobody else can dip in along the way.”
*Source: Monthly Direct Debit failure rate and average transaction amount - Office for National Statistics
**Source: Divorces and dissolutions in England and Wales - Office for National Statistics
