Marriage is by no means dead, but it isn’t the standard social norm it used to be either. Many couples cohabit, either before or instead of marriage. Some marriages end in divorce (or legal separation) which can lead to joint debt. Some couples who are married choose to keep their finances largely separate. This means that love and money can be a complicated topic. Here are some tips on it.
Guard your credit rating
If you’ve built up a solid credit rating as a single person, then be very careful about becoming “financially-coupled”. Credit ratings have all kinds of uses in addition to getting credit. For example, they can influence your ability to rent a house or to get certain kinds of jobs. Building them up is a long-term exercise, but dragging them down can take just one wrong decision.
You should be making it a habit to check your credit record periodically, ideally once a month or thereabouts. This will allow you to pick up quickly on any warning signs, like being told you have a new credit card. If you do see anything of this kind, report it immediately and be prepared for the possibility that it is your partner (although it may not be).
Have your wages paid into your own bank account
Keep a bank account in your own name and have your wages paid into that. Then, if appropriate, transfer funds from that account into a joint account and use the joint account to pay the household bills. That way, you maintain your financial independence and, quite bluntly, can hit the ground running after a break-up (at least financially-speaking).
Only have a basic joint bank account
Keep your overdraft function turned off or, at most, keep it on a very low limit. This is financial good sense as well as sensible protection. Even authorized overdrafts can be expensive. Unauthorized overdrafts can be little short of extortionate.
Make sure that you keep an eye on the income and outgoings from your joint account. If you see anything unusual, be willing to raise it, tactfully with your partner. Remember, if it relates to a joint account to which you are contributing, then you have every right to an explanation.
Keep a credit card in your own name
Using a credit card responsibly can go a long way towards building up and maintaining a credit record. This means that keeping a credit card in your own name can help to maintain your standing with the credit reference agencies. It can also provide a handy lifeline in the event of a breakup.
Be very careful about helping a partner with debt
Never say never but always be cautious. If a partner, especially a new one, lets you know that they have financial problems, then, by all means, be there for them. Feel free to consider giving them money. If you’ve earned it, it’s yours and you can take your own decisions about what to do with it.
Just remember to keep common sense in mind at all times. If your partner wants your money (or feels they need your money), then they have an obligation to be transparent with you not just about how they want to use it but how they got into the position of needing it. Even if you are happy with everything they say, ask yourself seriously if you can really afford it.
Be even more careful about joint debt
When you take out debt in your own name, you will be assessed on your own income. When you take out debt as part of a couple, you will be assessed as part of a couple, but you can usually be held individually liable for it. In other words, if your partner stops paying their share, the lender usually can and usually will come after you for the whole amount.