When you have a teachers’ pension, it is tempting to feel content that you will be secure in later life. Part of your plans will be the contribution your partner makes to your income and savings. However, money is one of those stressors in a relationship, and understanding how to address this is complex. Do you insist on a joint account? Is it better to have complete financial disclosure? Or, do you decide to trust your other half and believe they will contribute to the funds needed to remain comfortable?
Deciding how to manage your money as a couple is entirely personal to you and your partner. There is no single solution that fits all situations. Here we offer a guide for some of your options from which you can select.
Understand each other
You need to talk to each other about what you value. If you value security, then you need to say this. If you are happy to share some responsibilities but not others, then find your place of compromise. If you have a plan, something you are working towards, then say. You may know that you have made extra contributions to your teachers’ pension to ensure there is enough money for travel – your other half might not realise this and be happy spending cash like no tomorrow.
Does one of you have poor credit?
If you live with someone or are married to someone with a poor credit history, it won’t automatically impact on yours. However, it will impact on your finances if you open a joint account or you choose to take out a joint mortgage. Once you have joint finances you will be co-scored, where they check both your credit ratings before you combined your finances. This could result in funding being denied, which in turn will cause difficulties for your credit rating.
A joint account and joint finances
Of utmost importance is the trust needed and then the sense of fairness that follows. You need to be willing to make a fair contribution to this account. This might not be equal, but it will be proportional to the extras and treats you reward yourself with. You will need to revisit the agreements you make at this point in your life if you have children or one of you change jobs.
Set boundaries for independence and communicate
If you don’t know the spending habits of your partner, and you have no problem with this, you still need to set boundaries. It might be that you set each other a spending limit. Equally, if there is a significant decision, you might feel this ought to be a joint decision. The secret to making any degree of independence work is communication. You do not want your plan compromised because you did not know what your partner was doing with the money. A mutual understanding of finances means making the most of your resources and living a comfortable life to which we all aspire.
It may be if the relationship is new and you are still learning about each other, that you set up funds that are yours, funds that are theirs, and then funds that are ours.
The content in this article was correct on 22nd August 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.