This is an advertorial post with Aviva.
Money can put a strain on a relationship particularly when the money mindsets of both people are different. It’s a happy relationship when both people want to save, not spend, funds are built up over time and spending is within budget. But realistically how many relationships are like this? How do you find the happy medium with the management of finances? I wonder? Here is what I have done with my husband of 14 years.
The Joint Account
Our finances are mostly separate as in we have our own bank accounts, savings accounts, debts and savings. There are two things that are joint. We have a joint bank account where the monthly household bills and taken from. From here the mortgage is paid, electricity and gas, water, council tax, broadband, TV subscriptions, mobile phones and life insurance. Hubby puts the same amount of money into this account every month to cover all these bills.
This is where the responsibility ends for hubby as I keep track of all the spending. I ensure each bill is renewed and researched every year to get best deal. I do all the comparisons of insurance and changing of mortgage when we reach the end of a fixed deal. This makes sense as I write about personal finance and always know the best ways to save money of the regular bills.
Shared Credit Card for Monthly Spending
We also have a shared cash back credit card for regular monthly spending, both of us can use it for things like food shopping, petrol, eating out as a family, clothes for the boys. I pay for this credit card in full every month. This can be a good and a bad thing as we never really know how much this credit card will end up costing. Some months I end up contributing far more to the household bills than hubby, which can generate tension.
Separation of Debt
We each have some debt that we are solely responsible for paying off and that debt is either in my name or hubby’s name. I do not recommend sharing the responsibility for any form of debt as you never know what could happen. I have many friends who have split up from their partners and been left with a chunk of debt associated with their name. And if the ex-partner defaults, then yes, you are responsible for repayment of the debt.
We have two cars, both on PCP lease agreements, one car is my name and the other car is in hubby’s name. The monthly payments on each car are broadly the same and the payments leave each of our individual personal accounts.
Separation of Savings, Investments and Pensions
Savings, investments and pensions are again separate. I have my own savings system set up as I shared recently, read more here. The system includes pots of savings for all sorts of things, an emergency fund, fun money, pension, debt repayment and tax. I have a great system!
Investments and the decisions I take on what to invest in are very personal to me. A bit like my debt that stays in individual names, I feel the same way about investments. If you are interesting in learning more take a look at Aviva investments. Please be aware that the value of investments can go up or down and you might get back less than what you put in. Investment should be a long-term consideration, for at least five to ten years.
This split of finances works for us. It can be frustrating when monthly spend spirals out of control and I am the one left with the monthly credit balance to be paid off in full. But also, being self-employed my income is variable and often I am left with excess money that can be used to make the additional payments.
Of course, there will be some months where our spending is lower and I can move some money aside into savings for holidays and more one-off annual spending including Christmas, birthdays, annual insurance payments.
A Need for Communication
Most importantly you both need to be happy with how the household finances are run. There has been times when money has been extremely tight, in particular when I took my head out of the sand and realised that I had 16k of consumer credit card debt. This was a joint debt, but I have taken ownership of repayment of the debt, as its all in my name. And very soon it will be gone.
When money is tight, its important to talk about money and share your concerns. You might not be able to solve it as a couple financially but talking about it will make it easier to deal with.