Formost couples, tackling the inevitable financial strain of debt is part and parcel of a healthy relationship. But a relationship is two-sided and sometimes, debt problems can stem from one party. Recent research shows that while around a fifth of couples would help their partner in this situation, they would do so just once: after that, it’s up to their partner to pay off their debt by themselves.
Honesty is seen as the best policy: 86% of men and 85% of women would rather have knowledge of any debt their partner may be struggling with so they can tackle payments together. Both men and women would want to understand why their partner’s debts had mounted up in the first place, before stepping in with their own funds.
That said, many felt it is important to protect their own, ongoing financial instability, with 21% of women and 16% of men saying they would help their partner out, but only once.
With 43% of women becoming the main breadwinner in their household, according to findings, maintaining financial independence is an important issue for women today. Over two thirds of women want to have full responsibility for their own finances.
Debt can be a thorny issue for in any relationship. But ultimately communication is key for any couple – tackling issues early on will prevent a situation later where debt can become an insurmountable problem for both partners.
A good first step for couples to take, is to distinguish between different types of debt and paying off the most pressing first. For example, high-interest debt like credit cards, your best option is to pay these off as quickly as possible before you start to invest. You can then focus your saving efforts on paying this debt off, while making the minimum repayments on everything else.
This is a great way to make you both feel more confident about the state of your finances. Working together and taking a long-term view to become more financially resilient will ensure you are both prepared for life’s ups and downs.
This week we teamed up with Maike Currie, Director at Fidelity International, to give you some financially savvy tips for couples:
1. There’s no ‘i’ in ‘team’
Before you can both truly get a handle on your debt management, it’s crucial there are no additional financial secrets or concerns left in the closet. Discussing your finances, and debt can feel daunting, but it’s important that you do so. Getting into the habit of talking about money as a couple will help you when times get tough. Avoid pointing fingers and instead work towards solutions that will benefit you as a couple. If you can fix your finances together, you’ll both feel much stronger and in control of money management.
2. Ask yourselves: ‘How financially healthy are we?’
As part of your regular money management, it’s a good idea to have a sense of both your and your partner’s ‘financial health’. Is one of you a big spender, while the other one prefers to save?
Remember, everyone approaches their money differently, and you can learn a lot from each other when it comes to money management. To have a healthy and happy relationship, it’s important to understand where your mindsets are when it comes to both short and long-term goals – all of which will need money to fund!
3. Have some money ‘waiting in the wings’
Just because you’ve got yourselves out of the woods once, does not mean you shouldn’t be careful in future. It’s vital you both take steps to ensure neither you nor your partner ends up in the same position later and is prepared for life’s unexpected costs. Set a clear budget for the months/years ahead and agree an ‘emergency fund’ between you – this can be put towards something in the future for you both or be used if those bills start creeping up again.
4. Take a long-term view
Finally, it’s time to save for the long term to build up a nest egg to help you avoid borrowing unnecessarily in the future. A monthly investment into a pension or an ISA is an easy and tax efficient way to help give you the financial freedom you want for the future.