Couples' money: how to manage finance, secret debt, pensions and the gender pay gap with your partner

Money is a tricky topic and it’s one of the main reasons why couples argue, so having a frank discussion early on can make life much easier.
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Anna White14 February 2019

Peter wheeled his new £1,000 mountain bike through the living room and past his wife to the back door.

Money was tight with three children so he splattered the bike in mud and told her it was a hand-me-down from his dad. With separate credit cards she was unaware of his financial infidelity.

Hiding debts from your partner is becoming more commonplace according to money experts at the investment firm Fidelity, with many millennials keeping accounts hidden.

In fact, recent research from the Prudential revealed that one in three people polled had built up secret savings.

Five ideas to help you save money at home

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“This generation is getting married later so they are used to having personal control over money and the flexibility to buy without permission,” says Emma-Lou Montgomery, director at Fidelity.

Those who have seen their parents divorce may take comfort in “safe savings” or a “fall-back fund” separate from their other half in case the relationship breaks down, she explains.

Millennials have also lived through some seismic financial shocks, including 9/11, the global financial crisis and Brexit. “This makes them wary and means they have a tendency to stockpile,” says Richard Morris of investment advisers Killik & Co.

Cards on the table

Being financially independent and financially open in a relationship should not be mutually exclusive. A bare-all debt date night with your partner is vital to plan safely and maximise your investment opportunities, adds Morris.

“Start with conversations about your debts and earnings. This entails complete honesty. Once you have tackled this, then you are on a really sound footing.” Fidelity’s Montgomery advises.

“Knowing exactly what your financial position is, and what the financial position of your partner is, puts you in a stronger position when it comes to planning your future.

“If your spending has got a bit out of hand recently and both of you admit that’s the case, it can be a great relief to share that stress.”

When you both start to pull in your horns and save together, it takes a weight off both your minds, she adds. However, Montgomery does not recommend that you share details of all your spending. Some financial freedom is a good idea, she says, but it should be part of an overall combined plan.

You should both be completely clear on the details of your annual joint outgoings — household bills, holidays savings box, standing orders for memberships, household insurance, car insurance, everything.

If one person’s salary is far greater, then work out whether you should contribute different amounts to bills and the mortgage, in order to prevent resentment building up.

When it comes to money there is still gender stereotyping within relationships, especially if the woman has taken a career break or chooses not to work in order to raise children. Make sure the pension contributions of the carer are still being paid.

“It’s important that one person in the partnership does not take on the role of financial controller while the other remains in the dark,” says Montgomery.

“Money is a tricky topic when you’re in a loving place and it’s one of the main reasons why couples argue, so imagine how toxic it can become if a relationship ends and suddenly all sorts of unknown debts are thrown up.”

It’s deemed a smart move to open a credit card with a second cardholder. Should things turn sour, however, that can leave a lot of debt in one person’s name.

Mind the gender pay gap

Disparity between earnings, working part time to juggle childcare, being risk adverse to investment and relying on a partner’s wealth means that on average women retire with a pension income almost 40 per cent lower than men.

“This is the unknown gender pay gap,” says independent pensions adviser Stacy O’Sullivan. “Picture yourself at age 60 wanting to retire. You have nothing in the pension pot, your kids are still in their twenties and may need some support, your husband left you five years ago so all you have is your house.

"Don’t let that be your future. Have the conversation now and make sure there is provision for the future of the low- or non-earner.”

Join a workplace pension scheme while you are employed, says O’Sullivan, and if you are self-employed, set up a pension. If you leave work to bring up children, whoever is earning should continue to pay into their partner’s pension scheme. Pay in via a direct debit every month: “Don’t make it optional or you’ll never do it,” she says.

So how much is enough? “A good rule of thumb is 15 per cent of your earnings in your twenties and thirties. If you’ve not started by your late thirties, up it to 20 to 25 per cent.”