13 February 2023
Valentine’s Day can often be costly – this time last year Brits were projected to spend a whopping £1.37bn celebrating the big day.
This year, however, the cost-of-living crisis has altered many people’s plans. According to a survey by TopCashback, 13% of people said they plan to celebrate without spending any money, while 21% said they could not afford to celebrate at all.
The cost-of-living crisis is having a profound impact on people’s everyday finances, and while not the most romantic conversation starter, now more than ever it is vital that people discuss their financial circumstances and explore ways in which to boost their finances as a couple.
Rio Stedford, financial planning expert at Quilter says:
“Encouraging open conversations about your financial affairs is one of the most beneficial things you could do as a couple. While such conversations might not be as appetising as the supermarket ‘meal for two’ offers many will be opting for this year, the current financial pressures many of us are facing mean it is high time these conversations are had if you haven’t already.
“Not only is it important to understand your financial circumstances given the current cost-of-living crisis, but there are also many generous benefits available to couples and it could pay in the long run to ensure you make the most of them. In order to help create a stronger financial future for you and your partner, here are a few points to get you started:
1 – Do we have a budget and are we sticking to it?
“The cost-of-living crisis is placing a real strain on people’s everyday finances, so it is important to stay on top of things and make sure you are aware of how much you are spending.
“If you haven’t already, taking the time to have an open conversation about your finances and to create a realistic budget as a couple can make a real difference in terms of helping you feel in control of your money. There are many budgeting tools available online to help you get started.
“Often only one person will make many of the key financial decisions, but it is very important that both partners understand the decisions being made about their combined wealth. With a joint budget in place, you will be able to gain a better understanding of what you have to spend. While it can ensure you do not overspend and can live comfortably within your means, it can also remove the pressure of worrying about money and give you more freedom with your finances with a better chance of achieving your financial goals.
“Once you have a budget in place, it is important to hold yourselves accountable in terms of sticking to it, and you should refer back to it regularly as a couple and tweak it where necessary to ensure it remains realistic.”
2 – How well prepared are we for the future?
“What the future will look like is a common topic of conversation for couples, but the financial planning side of this is often overlooked.
“First and foremost, it is important to understand what is available to you as a couple in terms of tax allowances, thresholds and the rules that will apply to you when it comes to financial planning. Much of government policy around the tax benefits of your personal finances favour those who are married or in a civil partnership, so it is all the more important for those who are not to ensure they are aware of what applies to them. Where possible, you should seek professional financial advice to support you in your decision making to help you make the most of what is available.
“It is also vitally important that you ensure both you and your partner have accurate and up to date wills in place to help ensure your wishes are fulfilled if the worst were to happen. This is particularly important for those who are not married as unfortunately couples simply do not enjoy the same rights or financial protections as spouses or civil partners on death. For example, unmarried couples without a will run the risk of not automatically inheriting anything on death unless they jointly own property. By contrast, a married partner would inherit all or some of their partner’s estate, even without a will being left.
“Likewise, you should explore the topic of Lasting Powers of Attorney (LPA) and each consider putting one in place. An LPA can provide the peace of mind that your wishes will still be carried out should you lose the capacity to do so yourselves.”
3 – Are we making the most of our money?
“A key benefit of discussing your finances is being able to make use of linked accounts and investments. Often the conversation about linking finances ends at the convenience of a shared current account and a jointly held mortgage. However, spousal linking of investment accounts in the UK is increasingly common as it can help to lower the overall charges being paid.
“Alongside this, it is important to consider how your money or an asset is held, whose name is it held in, and who will benefit from it. These factors are often ignored by married couples, but you may be able to achieve more return on interest payments in savings accounts if they were placed in the name of the partner in a lower tax band. Similarly, you may wish to consider exploring whether to top-up your partner’s pension rather than your own to ensure you are receiving the maximum tax relief available."
“Additionally, you may also wish to explore other options available that could help you save money such as joint life cover, car insurance, or other similar products.”
