Making decisions for how you want to manage your money can feel like a lonely process.
But actually, if you’re married or in a long-term relationship, financial planning is very much a team sport, and your partner is your most important teammate.
Here are five reasons why you need to do your financial planning alongside your partner.
1. You’re in it together
Even if there’s a difference in your incomes, it can often be useful to consider yourself and your partner or spouse as equal financial partners. The main reason for this is because, when you’re making financial decisions, you’re most likely making them together.
For example, if you’re buying a home together, your mortgage affordability or ability to afford to build a home could depend on both of you. As a result, it makes more sense to make decisions like these jointly, so that you both have a say in these life-changing moments.
For some couples, it can be preferable to share this burden, equally distributing the responsibility between you.
Alternatively, if one of you is more financially literate, it may make sense for that person to take the lead to handle the detailed processes.
You may even want to set some boundaries that keep parts of your finances separate. Be honest and clear about how you want to do this so you both know where you stand.
Whether you decide to share the burden or separate it out, you should include one another in conversations and discussions about managing money throughout your relationship.
2. It’s good for your relationship
Another reason that planning together is important is because the openness and honesty that comes with these conversations can be good for your relationship.
According to the Money and Pensions Service, 40% of people keep secrets about credit cards, loans, and savings from their loved ones, most often their partners.
For 25- to 34-year-olds, this figure is even higher, with 59% of people hiding money products.
It’s important to be open about your respective financial histories. This is because issues such as debt can become a joint issue, particularly for mortgages and other forms of credit.
Always make an effort to be honest with one another about your past spending or similar issues. This honesty will be a good thing for the health of your relationship, as well as your finances.
3. You could pay less tax
One particularly useful part of working alongside your partner when managing your money is that it allows you to make the most of any annual tax allowances that you have, meaning you might be able to pay less tax.
For example, each tax year you have an individual ISA allowance. ISAs allow you to save and invest your money without having to worry about Income Tax or Capital Gains Tax (CGT).
In the 2021/22 tax year, the ISA allowance is £20,000. That means, if you and your partner each made full use of your allowances, you could tax-efficiently save and invest up to £40,000 between you.
Similarly, you also have a separate allowance for CGT if you sell shares or assets held outside of an ISA. This is called the CGT “exempt amount” and stands at £12,300 in the 2021/22 tax year.
By holding assets and investments in both your names, you and your partner could each make use of the exempt amount, allowing you to take up to £24,600 worth of gains without having to worry about a CGT bill.
Sharing your finances between the two of you can allow you to make the most of these allowances together.
4. You can align your financial plan with your goals
Crucially, you need to be able to align your individual spending habits and wider financial plans with your joint future goals.
What is it that you want for the future? Do you want to retire at the end of a playing career and move abroad? Or perhaps you intend to base your goals around your partner and their career plans?
Your financial plan needs to fit with your wider life goals, whatever these may be. That’s why planning with your partner is so important – it ensures that you, your partner, and your money are all pulling in the same direction, however you choose to manage it.
5. You’ll both be happier for it
No matter what you ultimately decide to do, how you manage your money needs to work for both you and your partner. There’s no right answer or “one size fits all” approach but discussing your goals and planning together is often the best strategy.
By planning with your partner, you can create a seamless financial plan that helps you both to reach your joint goals together.
Working with a professional financial planner can be transformative here. They can help you design a financial plan and help you manage your money so that both you and your partner are happy.
Need help managing your money?
If you’d like help managing your money for you and your partner, please get in touch with us at ProSport Wealth Management.
We have years of experience in helping professional sports people just like you to manage your finances, both throughout your playing career and beyond.
Email email@example.com or call 01204 602909 to find out more.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.