Financial Conversations

It can be hard to define the point when two people become a couple, planning to be together for the years to come. When it does happen however it can be an appropriate time to make sure that all practicalities are addressed. This means ensuring that you and your partner are aligned financially as well as emotionally. Entering into a relationship means changing from thinking in terms of personal wealth to thinking in terms of family finance. Here are five questions to get you started on these important conversations.

Do you have savings?

Before you start to align your finances, you both need to be honest to each other regarding the state your finances are currently in. This means that both of you need to be clear about your financial assets such as savings and their financial liabilities. You also need to be clear about your attitudes to money. From this point on you’ll be working to a joint financial plan and it’s crucial that you’re both comfortable with it. With this in mind, this may be a good point to get some professional advice from a financial advisor.

How would you describe your attitude towards investing?

There are a variety of different investments available and choosing the right one(s) for you depends on a number of factors including your goals, your anticipated time frames and your tolerance for risk. If you’re to develop a financial plan with which you both feel comfortable, then you need to agree on an investment style with which you both feel comfortable. You’re also going to have to reach an agreement on how to manage the practicalities of investing. In other words, who is going to take responsibility for choosing investments and going through the process of buying them? Even if one partner takes day-to-day responsibility for this, the other partner needs to be in touch with what is happening. They also need to know where to find all relevant documents in the event of something happening to their partner.

What would happen if one of us died tomorrow?

There are basically two parts to this question: Why do we need life insurance and if what needs to be in our wills? The answers depend largely on circumstances. When property or children come around, for example, then making provision for the death of one half of the couple needs to be taken very seriously. In addition to looking at loss of income from working partners, couples may also need to look at the cost of replacing everything each half of the couple does for free, e.g. providing childcare. This can mean that life insurance is just as important for the non-working partner as it is for the working one.

What would happen if one of us became severely ill/had an accident tomorrow?

This is a fairly similar question to the one of death; however in this case you also need to think about the cost of providing care for the affected partner as well as (temporary) loss of income and their general input to the family.

What sort of retirement do we want to have?

Understanding how you want to spend your post-work years is the first step in working out how much money will be required to pay for them. This is another area where is can be particularly helpful to get professional advice from a financial adviser.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED