Talk to your partner about money (before it's too late)

It’s wedding season. From now until September, every stately home hotel in the country will be packed with wedding-goers, couples and gangs of over-excited children in smart shoes.

On top of that, mortgage approvals have shown a significant spike. The trade association that represents mortgage lenders, UK Finance, revealed this week that lenders approved almost 43,000 mortgages in April. That’s more than 11 per cent higher than a year before.

So, that’s lots of couples getting hitched, lots of couples getting married and lots of commitments being made.

But before marrying, buying a home or even just moving in together, it’s vital to set some financial ground rules.

“Money issues can make or break a relationship, so it is important to start an open and frank discussion about it as early in the relationship as possible. Establish these conversations as the norm and there's nothing to be afraid of,” says Gary Quick, director at PKF Francis Clark Financial Planning & Wealth Management.

“Ask each other about income, aspirations and ambitions and talk about the realities of living together including paying the bills and access to the finances you have between you.”

The trouble is, talking about money can feel uncomfortable. Research from Lloyds shows that 36 per cent of people say they have felt worried, 29 per cent have felt embarrassed and 18 per cent ashamed talking about their personal finances.

For the under-45s, that’s even higher.

‘A good opportunity’

Starting conversations about finances can feel difficult but Claire Porter, associate solicitor in the family law team at SAS Daniels, says that marrying or moving in together can provide the perfect prompt for a frank discussion.

“If you choose to buy a house with your partner, a mortgage lender will request bank statements to assess affordability, she explains. “Mortgage lenders pay attention to any existing debts, so a good way to initiate discussion around this area is to point that out. It will give you a good opportunity to go through bank statements and other documents together before submitting to lenders.”

As someone experienced in mediating between family members who disagree, she has some advice on ensuring those difficult conversations go well.

“Couples should be clear about what their cohabitation will look like on a day-to-day basis, for instance who’s responsible for paying the mortgage, utility bills or household repairs. Consider if a joint account for bills is a good idea, or whether you’d both prefer to retain sole accounts. A frank and honest discussion at the start can prevent issues arising in the future.”

So what if the conversation does veer off course as one partner admits to more debt, perhaps, than the other had expected? Peter Saddington, a Relate counsellor working with Lloyds, says: “There can be a lot of intense feelings but the important thing is to have a calm conversation about the issues. Tell them how you feel rather than focusing on what they are doing wrong to avoid coming across as critical and accusatory.”

It can even be a positive step, laying the groundwork for a more honest and open relationship. Emma-Lou Montgomery, associate director of Fidelity International, says: “Start with conversations about debt and earnings. Once you’ve tackled these, then you’re on a really sound footing and ideally placed to talk about your future hopes and dreams.

“Now’s the time to discuss your future financial hope and set in place realistic plans to achieve them. Knowing not only exactly where your finances are, but also where those of your partner are, means you’re in a very strong position for a bright financial future together.

“Don’t obsess but always keep open communication lines. Money is part and parcel of life and having a healthy relationship with it will be the cornerstone of a healthy relationship with your other half.”

Of course, you might not want to blend your finances. Moving in together will tie your finances, assuming you share bills. But that doesn’t mean you have to combine everything.

Joe Roxborough, an independent financial adviser at the firm Ascot Lloyd, says: “An important thing to decide is how much or little you wish to mix your finances with your partner. This may be determined by your existing commitments to children, ex-spouses or otherwise, and being upfront with your financial obligations and objectives will be best to ensure you aren’t misleading (or being misled).”

‘A test of a relationship in general’

Some couples bare everything in advance of marriage or co-habitation with a prenup or “living together agreement” but that’s often only for wealthier couples who have assets to protect.

Sarah Passemard, a family law partner at Paris Smith, says that prenups might be more common if couples saw it more like making a power of attorney: “It's a responsible step to take, to avoid potential problems in the future. Hopefully it won't be needed but if it is, they are demonstrating that they are thinking about the future for both, not just themselves.

“It's almost a test of a relationship in general. Granted, some people find it difficult to talk about money, the same way many people can't talk about death. I'm not suggesting that couples should always have everything jointly. I am suggesting that in a long-term relationship you should have a fair idea of each other's assets, pensions and income.

“How can you make life decisions together unless you know? Can you afford to move? Take that new job? Go on holiday? Privately educate your children? Retire? Even go out for dinner? Even though it might be an uncomfortable conversation, discussing money is fundamental to having a life together.”

Awkward, taboo, uncomfortable maybe. But having this conversation now might save a lot more heartache long-term.