Are you heading down the aisle soon to tie the proverbial knot? Congratulations! Before you set foot on that aisle though, there are things to think about that span far beyond that of hair, make up, dresses, suits, cakes, and fanfare. For many couples planning their wedding, personal finances can present a major challenge. Sometimes love is not enough to simply make money matters fall into place, so it’s best to come up with a financial strategy before you get into a civil partnership.
Side note: In the UK, many couples grapple with the idea of marriages, civil partnerships, common law partnerships – check out this Citizen’s Advice article if you need a bit of clarification on what your legal rights are as a couple.
What the stats say about couples and finances in the UK
Just one year ago, a study conducted in the UK featured in an Independent article which showed that money worries are a leading cause and contributing factor of marriages falling apart. In fact, in a poll involving over 2,000 British adults, had one in five say that concerns over finances and arguments about money was the main cause for their divorce or separation.
The Office for National Statistics says that in 2016 alone, 107,000 couples divorced which was a whopping 5.8% increase from the previous year.
Relate, a relationship charity in the UK, released statistics showing that the top relationship strains include:
- Money matters (26%)
- Lack of understanding of each other (20%)
- Low libido/sex drive (19%)
- Different interests (16%)
There’s hope though, as just a few months back, the Independent released new statistics for 2018 stating that there has been a 6% decrease in the number of UK divorces since 2016. One might hope that this is because couples are taking responsibility of their money matters (and other factors that influence the happiness and stability of their marriages).
Get real with your partner – talk it out!
Of course, saving goals, investments, annuities, and budgets are not the most romantic topics for soon-to-be-weds, but in order to truly pledge a vow of “for richer or poorer” when you marry, it’s best to be on the same page, especially when it comes to your finances. If you want to build wealth with your partner and have total transparency when it comes to your money, then you should consider taking the following financial vows with your partner on your wedding day.
1. We will set a savings and retirement plan in place together, and make it a priority.
Retirement is something that you and your partner will face together, so it’s okay to check what your partner is contributing to those accounts. Make sure that you are saving as much as possible for the next phase of your lives together. You should also consider opening a joint savings account that both of you have access to and contribute to on a monthly basis.
2. We will share financial objectives and work together to pay off any debts.
While you might not be legally responsible for your spouse’s debt, you should both be willing to work with your partner to get it paid off as soon as possible. Even if it means cutting back on the lavish lifestyle that you might be able to afford, so that your partner has some breathing room to pay off debts without feeling bad about lagging behind in contributions. The best part of this vow is that you are vowing to help each other out, for better or for worse.
3. We will be open and honest about money at all times.
If one partner is a spender and the other is a saver, it can lead to money secrets. One partner might open a credit card or an account that the other doesn’t know about. It’s important to plan these things together. Chances are, if both parties have a say in what accounts and lines of credit are opened, poor personal finance choices won’t happen. If you are in debt or paying off loans and accounts, it is best to be as transparent and open about these accounts as possible, before you go through with the wedding.
4. We will respect each other’s financial boundaries while still working towards a common goal.
Some newlyweds believe in merging personal finances and accounts while others might have some resistance to this idea. This is often due to independence or a money system that already works well for one partner. There’s no right or wrong way to handle money matters at home. If you are open and honest about money but still want separate accounts, then that’s fine. It’s important not to bully your partner into sharing finances if it’s not what they want. Set boundaries about how much of your personal finance matters you are willing to share and make sure that you are both happy with it. iNews released an interesting article on couple’s joint savings accounts which you can read if you are interested in finding out more information on the things to consider before agreeing to a joint savings account with your partner.
5. We will set the right mechanisms in place to protect our relationship and family from potential family hurdles.
Some mechanisms you should consider setting in place as a couple include:
- Emergency safety net – you should have money set aside to cover at least 4 to 6 months of expenses, just in case you are faced with financial difficulties or one partner loses a job.
- Prenuptial agreement – unfortunately, prenups have a bad connotation attached, but it’s not all bad in reality. It’s not so much about protecting yourself from your partner’s potential greed, but more about protecting your partner and your family finances against potential financial downfall. If one partner has a business that fails and property is attached, it’s best that you and your partner have a prenuptial agreement protecting assets and finances.
- Insurance cover – accidents can happen in all areas of life, so make sure that you are covered. Look into life insurance, disability insurance, liability insurance, and of course medical insurance.
- Planning for future – draw up a will, designate child guardians, power of attorney and similar.
Get ready to say “I do”!
Many people think that marriages are all about sunshine, happiness, and love. It’s important to realise that once you are married, the real work begins. Real life starts and your personal finances form a large part of this very exciting, yet challenging next stage. Get ready to say I do with complete peace of mind that you and your partner are on the same financial page.