Trust, respect and communication are thought to be the foundations of a strong relationship.
Whilst this may be true for most of us, our research suggests that trust and communication may not be completely at play when it comes to couples’ finances…
Worryingly, our recent research revealed that 23% of UK adults suspect their partner has hidden some of their retirement savings, with a further 27% revealing they have pension savings or investments they have not disclosed to their significant other.
Money can be a tricky subject. Some people may be embarrassed about previous debts or a lack of savings, for example. However, being financially open with your partner has many benefits; it keeps your goals aligned and can also build trust.
And as it’s Valentine’s Day, there couldn’t be a better time to really get to know your partner financially! Not sure where to start? We’ve got five key questions for your partner to get the ball rolling…
- Is there anything worrying you about your finances?
Money plays a significant role in your life, so getting stressed about it is expected. Whether it’s your credit score, debt, or lack of savings, your worries are valid. Discussing matters like your personal debt or a lack of savings may seem embarrassing at first, even with your significant other.
It’s really important to be as upfront with your partner as you can. After all, understanding each other’s situation can help you both to take steps to address any potentially problematic areas. For example, you could work together to build a joint savings plan to bolster future finances or develop a debt co-management plan.
While it can be daunting bringing up your money worries to your partner, doing so is the first step to being financially transparent. Not only can you address what’s been on your mind (and gain a sense of relief by getting it out in the open!), but you can start to plan together how you aim to resolve these worries.
- How do you imagine us spending our retirement?
We all have our ideal retirements, whether it’s a jet-set life abroad or a peaceful one with the grandkids. Planning your golden years with your other half can lead to an exciting conversation and keep you aligned on your long-term aspirations. Moreover, planning appropriately for retirement can ensure you achieve your individual and shared retirement goals. If your dream is to travel the world whilst your partner would prefer to spend more time with the family, addressing such differences early can set the foundation for how you save and plan for retirement.
Whatever lifestyle you’d like to enjoy, it’s important that you have a date in mind for when you’d like to retire. This not only gives you a more structured goal to aim for, but it can make sure you’re both on the same page when it comes to timeframes.
- What pensions do you have?
It might sound basic but discussing the status of each other’s pensions (workplace or personal) is a great way to establish your prospective future finances.
You’re usually automatically enrolled into your pension by your workplace when you start employment. Other than the contributions you see on your wage slip, you might not be fully aware of the total balance of your pension pot or if you have any other workplace pensions from previous roles. And remember, you can always use the Government’s tracing Service if you’re worried that you’ve lost track of some previous pensions.
Beyond your workplace pension, there is also the matter of any personal pensions you have. Your personal pensions require slightly more involvement than your workplace pension, as you likely arranged these yourself. In addition to your workplace pension, you must factor any personal pensions into your plan – even a little can add up to a lot!
Understanding each other’s current pension contributions can give you a good idea of the income you’re likely to have in retirement. This also lets you assess together whether there is room to increase your contributions in order to meet your goals later down the line.
- What are your thoughts on savings and investments?
Everyone has a unique perspective on investing. Some people prefer high-risk opportunities with the potential for greater returns; others lean towards a more cautious approach. Understanding each other’s risk tolerance and investment strategies is key to building a retirement plan that aligns with your financial goals and comfort levels.
One of the most important conversations you can have with your partner is about savings and investments. While a difference in risk tolerance might not seem important, it’s vital that when approaching investments together, you’re on the same page with your overall strategy. To help determine what level of risk you’d both be willing to venture into with investments, consider your capacity for loss and how much of your money you could afford to lose.
If you’re unsure of what your attitude to risk might be or whether your partner’s could impact your own, it would be wise to seek financial advice rather than making any estimated guesses. A financial adviser can not only determine your attitude to risk for you but also recommend portfolios that will suit your circumstances.
- Have you got a will?
An even more difficult conversation than discussing money is talking about what happens when you or a loved one passes away. Although this might be a morbid discussion, it’s an important one to have – especially if you’d like your partner to oversee your wishes or vice versa. Without a will, the law dictates who inherits your estate, which might not align with your wishes.
To get started on arranging your wills together, make a list of your assets and decide who will inherit your estate. You will also need to appoint an executor, the person carrying out your wishes. If you would like your executor to be your partner, discuss this beforehand! A will can be created online using trusted sources or through financial advice.
If you haven’t already, consider making or updating your wills; it’s one of the most meaningful ways to protect your loved ones and secure your legacy.
Just remember that while some of these conversations may not be easy, addressing them openly is key to building a financially secure and fulfilling future together. As a partnership, they can benefit you in the long term by allowing you to work together to achieve shared goals and foster trust.
