Taking a Joint Approach to Finances

Marriage or civil partnership is a significant milestone in life, one that we hope will be filled with joy, commitment, and the promise of a shared future. But alongside the emotional and social aspects, there's another critical component that often requires attention - your finances.

Taking a joint approach to managing your money as a couple can not only help you save in the short term but also lay a strong foundation for your collective future.

In this second article in our series, we look at how marriage or civil partnership can boost your financial future.

Aligning Your Financial Goals

When you enter into marriage or a civil partnership, you’re committing to a shared life. This includes your financial future, and one of the first steps in this journey will be aligning your financial goals. Whether it's saving for a home, planning for children, or preparing for retirement, having a unified vision can help you make informed decisions that benefit both of you.

You might like to start by discussing your individual financial goals and see where they overlap. This common ground can then become the foundation of your joint financial plan.

Maximising Tax Benefits

One of the immediate financial advantages of marriage or civil partnership is the potential for tax benefits. Marriage Allowance, for instance, allows one partner to transfer a portion of their personal allowance to the other, potentially reducing your overall tax bill.

By sharing your personal allowances, you could reduce your annual Income Tax bill by up to £252 per year. And you can backdate your claim for any of the four previous tax years, which could be worth up to £1,256.¹

Explore how combining your finances can optimise your tax savings.

Shared Expenses and Budgeting

Marriage or civil partnership often leads to the merging of households, which can result in significant savings. Sharing living expenses like rent, utilities, and groceries can free up more money for savings or investments. However, it’s crucial to establish a budget that works for both of you to avoid any misunderstandings or conflicts.

Create a joint budget that reflects your combined income and expenses. Regularly review this budget together to ensure you're on track with your financial goals.

Building a Safety Net Together

Financial security is vital in any relationship. As a couple, you can strengthen your safety net by pooling resources. This includes building an emergency fund, investing in insurance, and contributing to retirement plans. By doing this together, you’re not only protecting yourselves individually but also securing your shared future.

Consider opening a joint savings account dedicated to your emergency fund. Aim to have three to six months’ worth of living expenses saved to cover any unexpected financial surprises.

Investing for the Future

Investing as a couple can open up new opportunities that might not have been possible individually. Whether it’s through joint investment accounts, property purchases, or retirement planning, working together allows you to leverage your combined resources for greater financial growth.

Discuss your risk tolerance and investment preferences openly. A diversified portfolio that reflects both of your risk appetites can lead to a balanced investment strategy.

Protecting Each Other with Wills and Estate Planning

Marriage or civil partnership is a crucial time to revisit or create your Will and estate planning. Doing so ensures that your assets are protected and distributed according to your wishes. This step is especially important if you have children or other dependents.

Consider seeking legal advice to ensure your Will is both comprehensive and up-to-date, especially since marriage or civil partnership can cause a previously-written Will to become invalidated. It’s a crucial part of safeguarding your joint future.

Communication Is Key

Finally, while the financial benefits of marriage or civil partnership are significant, they require ongoing communication. Regular discussions about your finances can prevent misunderstandings both now and, in the future, and help you stay aligned with your goals.

Try to schedule regular financial check-ins to discuss your budget, savings, and any upcoming financial decisions. Keeping the lines of communication open is the best way to ensure a harmonious financial partnership.

In Summary

Taking a joint approach to your finances when you get married or form a civil partnership can bring substantial benefits. From tax savings to building a robust financial future, working together allows you to make the most of your resources. By aligning your goals, communicating openly, and planning strategically, you and your partner can navigate your financial journey with confidence and peace of mind.

Next month’s article will consider the next lifestage of buying a home. In the meantime, if you would like to get in touch, please telephone: 01442 874888 or email. You can read our previous articles here.

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The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

¹Marriage Allowance - Gov UK, March 2024