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Avoid any pitfalls in shared finances
By Hannah Ricci
Whether it's men leaving the toilet seat up or women spending hours getting ready, our partners usually have a few annoying habits. However, while these little things might niggle us, it's the big M word that causes most couples to come to blows. In fact, money was found to be the most argued-about subject in a survey of couples by relationship advice service Relate. The key is not to assume money isn't going to be an issue in your relationship, it will - but it doesn't have to be a problem as long as you are open and honest with each other from the outset.
First steps
While you are dating you will already have formed some sort of pattern - whether conscious or not. Review how things have worked so far and if you both wish them to continue in a similar way when you move in together. Do you split everything 50/50 or contribute to a kitty? If one partner earns considerably more than the other, it's vital to discuss whether you're going to take this into account. "This is probably the most common cause of conflict, when couples contribute equally despite one earning more, the other often feels resentful as they are left with less personal money after all the joint expenses are paid for. You should think about the value of non-monetary contributions to the household. If one partner works part-time or from home, they will probably end up doing more housework and chores - this should be taken into account.
Day-to-day practicalities
The next step is to draw up a monthly budget that you are both happy with. Different methods work for different people, but if one partner is bad at managing money, it makes sense for the other to take more control of the joint expenses, as long as this is agreed on.
It's generally advised that you both keep separate accounts into which your salaries are paid, and each pay for your own personal expenses such as mobile phone bills, socialising, retail therapy and so on. It's wise to open a joint current account and setting up direct debits for household expenses like bills and food shopping, and perhaps a joint savings account for treats like holidays. It's better to be cautious and open a savings account that requires both signatures to withdraw money, and be sure to make clear what the joint current account will be used for.
Home ownership
If one partner moves into a home owned by the other, consider whether you will become a lodger or joint owner. "Simply making contributions to the mortgage payments and helping fund home improvements is not a wise move because that does not give you any automatic legal rights," warns Caroline Wright, a family law solicitor at Boodle Hatfield in London. "If there is no formal record of your intentions there may be a battle over the beneficial ownership of the property if you fall out."
At this stage it's a good idea to seek legal advice and sign up to a cohabitation agreement to set out the contributions you will each make. If you buy a new property together as an unmarried couple, Wright advises that you hold the property as tenants in common rather than as joint tenants. "This will involve asking your solicitor to draw up a declaration of trust, which will specify details such as the share of the property you each own, based on your contribution to the deposit and the mortgage repayments," she explains. "It ensures that should you split up and have to sell, the proceeds will be divided fairly according to the amount you put in." Another advantage of being tenants in common is that if you die, your share of the property forms part of your estate as opposed to automatically passing on to the surviving partner.
It's usual for married couples to be joint tenants when they purchase property, which means they own equal shares in it. The consequence of this is that if one dies, their share passes automatically to the surviving spouse. Marriage brings more rights to each other's money, as all assets acquired during the marriage will fall into the family pot to be shared out in the event of divorce. There's often a grey area regarding short marriages and compensation for women who give up their careers to have children.
Pre-nuptial agreements
Pre-nuptial agreements can be drawn up before you tie the knot - outlining each person's ownership rights to property, savings, investments and any other assets, and how finances will be divided in the event of divorce.
Some people view pre-nups as unromantic and an unnecessary formality. However very few people get married with plans of divorcing further down the line, so the focus should be on protecting yourself and your family - just in case.
A much-publicised example is the break-up of Sir Paul McCartney and Heather Mills. The former Beatle dismissed Miss Mills' offer of a pre-nup as unromantic and he now faces splitting his £800 million fortune with her. "Many people have this ideology about marriage which is quite silly," explains Philllip Hodson, a fellow at the British Association of Counselling and Psychotherapy. "Any relationship which involves the combining of finances should be approached on business-like terms."
Having said that, pre-nups aren't necessary for everyone. Young couples in similar financial positions for example are unlikely to need one, but it's worth getting legal advice if you are unsure. Although pre-nups aren't legally binding - providing both parties seek legal advice to ensure they are carefully drafted and signed in good time before the marriage - the courts are likely to take them into account.
Married again with children
If you have children from a previous marriage, things are going to be more complicated. If you both have children you'll probably each want to protect your own, and in order to do this you'll need to outline your requests on how the finances will be arranged in the pre-nuptial agreement. It's also worth reviewing your wills to ensure, for example, that your inheritance would pass to your own children rather than your partner's. You will also need to discuss day-to-day living. For example, if your children will be living with you and your new partner, will you share the financial responsibility of them, or will you be personally responsible, hopefully with help from their other parent? Similarly, if your children will be living with your ex-spouse, you will probably be required to provide some kind of financial support and maintenance.
Tips for a happy home
Discuss financial goals and attitudes towards money early on
Review how finances have worked so far
Consider salary gap and if this will be taken into account
Consider value of non-monetary contributions to the household
Draw up joint budget together
Have salaries paid into separate accounts
Open a joint current account for bills, food and household shopping
Open joint savings account for treats like holidays
Consider cohabitation agreement or pre-nup
Decide financial responsibility for children
Review wills
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