8 February 2023
Money can cause major problems in a relationship. Wealth manager RBC Brewin Dolphin surveyed the nation1 and found that 23% of couples said that the cost-of-living crisis had put a strain on their relationship, with 27% of women feeling this more, compared with only 18% of men. Interestingly the strain of the cost-of-living crisis seems to decrease with age as 32% of 18–24-year-olds felt the strain and only 10% of over 65s said they felt it had affected their relationships.
The older generation also seem to have had fewer arguments about their finances with only 8% saying they had argued more about money in the last 12 months than before, compared to 29% of 35–44-year-olds.
Managing your money as a couple can be complex and there is no right way to live in financial harmony, particularly in the current climate as everyday prices spiral. Being open and honest in a relationship is meant to be the key to marital bliss however, 25% of those aged between 35-54 have lied to a partner about money, with only 9% of over 65-year-olds having done this. More women admitted to being dishonest to their partner about money 22%, compared to 15% of men.
Planning your finances with your partner could help you build a more secure financial future. Whether you’ve been together for years or are embarking on a new relationship, Amy Pethers wealth adviser at RBC Brewin Dolphin provides four financial planning tips for couples:
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1 Find Out Now surveyed 6,347 GB adults from Thursday 2nd to Friday 3rd of February. The sample consists of a nationally representative sub-sample of 2,143 respondents both in a relationship and with more than £50,000 annual household income. Find Out Now is a member of the Market Research Society (MRS) and the British Polling Council and abides by their rules.
1. Be open with one another
“Talking about your finances may be difficult for some as our survey shows, but it’s a really important way of maintaining a healthy relationship. It’s easy to assume you and your partner are on the same page when it comes to your finances. But if you haven’t had an open and honest conversation about your savings, spending, income and debt, you could be in for a nasty surprise. Your habits and attitudes towards money could differ substantially, potentially leading to arguments further down the road.”
2. Try to agree some mutual goals
“It’s great to have individual goals in life, but you might find it easier to stay on track if you feel like you’re in it together. Agreeing one or two mutual goals will give you something concrete to work towards as a couple.
“Having goals is important because it helps you decide how much money you need to save, and where to invest it. If, for example, you want to move to a bigger property in three years’ time, then it probably makes sense to put this pot of money in a low-risk cash savings account. That way, you won’t run the risk of your savings plummeting in value just before you need to access them.
“For goals that are ten or more years away, you might want to consider investing at least some of your money in the stock market. This will give your money the opportunity to grow over the long term, helping you reach your goals more quickly.”
3. Think about your tax position
“Tax isn’t the most romantic subject, but there are several tax planning opportunities that could help more of your money go towards your future. ISAs, for example, let you each invest up to a maximum of £20,000 a year (2022/23) to benefit from tax-efficient income and growth. If you both open an ISA, that’s a combined £40,000 that you could shield from income tax and capital gains tax (CGT) each year.
“If you’ve used up your ISA allowances, the CGT exemption lets you each realise tax-free investment gains of up to £12,300 in the 2022/23 tax year. Couples who are married or in a civil partnership can transfer investments between one another tax free, which effectively doubles the CGT exemption to £24,600. Bear in mind that the CGT exemption is being slashed in April 2023 and again in April 2024.
“There’s also the personal savings allowance, which is the amount of interest you can earn without paying tax. This is £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and nil for additional-rate taxpayers. Again, couples who are married or in a civil partnership could consider transferring savings between one another to maximise each partner’s personal savings allowance.”
“Tax can be complicated, so make sure you seek professional advice.”
4. Consider your ‘Plan B’
“Talking about death and illness probably won’t make your list of best-ever date nights, but it’s really important to consider how your finances would hold up if the worst were to happen. As a couple, your finances may be closely intertwined, which means if one of you suffered a serious illness or passed away, the other could really struggle financially. A financial adviser can help you decide on the right policies and level of cover for your personal circumstances.
“This is also a good time to think about drawing up a will. Writing a will ensures your money and other assets go to the right people and causes, and that your wishes are carried out. Having a will is especially important if you aren’t married or in a civil partnership – even if you’ve been living together for years, you’ll have no entitlement to your partner’s estate if they die without a will.”
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Disclaimers
The value of investments and any income from them, can fall and you may get back less than you invested. RBC Brewin Dolphin is a trading name of Brewin Dolphin Limited. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 124444).
PRESS INFORMATION
For further information, please contact:
Richard Janes richard.janes@brewin.co.uk / Tel: +44 (0) 20 3201 3343
Siân Robertson: Sian.Robertson@brewin.co.uk / Tel: +44 (0) 20 3201 3026
Chloe McFarlane: chloe.mcfarlane@brewin.co.uk / Tel: +44 020 3201 3490
Payal Nair payal.nair@brewin.co.uk / Tel: +44 (0) 20 3201 3342
NOTES TO EDITORS
About RBC Brewin Dolphin
RBC Brewin Dolphin is one of the UK and Ireland’s leading wealth managers and traces its origins back to 1762. With £51.7* billion in assets under management, we offer award-winning, personalised wealth management services from bespoke, discretionary investment management to retirement planning and tax-efficient investing.
Our qualified investment managers and financial planners are based in 33 offices across the UK, Jersey and Republic of Ireland. They are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients’ needs at the core.
As part of Royal Bank of Canada (RBC), we are now able to draw on the strength of a global financial institution to continue to improve the service we provide to our clients and drive further innovation across our business.
*as at 30th June 2022.