Money pitfalls for couples

Sarah Pennells, author of Financial Bliss, How to Grow Your Wealth Together, tells us about the personal finance pitfalls that can lead to relationship meltdown

1. Splitting the bills unfairly

When two people earn different amounts, splitting the bills 50-50 can soon become an issue for the one who earns less. Often, the person with the higher salary hasn't given it a second thought, while the other partner becomes progressively more unhappy with the situation and begins to feel that it's not just about money but also about fairness in the relationship. Talk about this as soon as you can, even if it means waving your bank statements under your partner's nose. Often, the best way to resolve this is to split the bills more fairly, say 60-40.

2  Taking all the decisions yourself
When one person makes all the financial decisions in a relationship, it can cause problems. Sometimes, the one who earns the most may feel they have a right to make the decisions for both people. Alternatively, when neither of you want to manage the money, someone usually ends up drawing the short straw. If you opt out of making the decisions and then you're not happy with whatever action has been taken, you have only yourself to blame. And remember that, if you have a joint loan, your credit information will be linked, so if your partner makes a bad decision it could affect your credit score.

3  Keeping your debts secret

If you have secret debts, it can drive your relationship onto the rocks. When Sarah Pennells was writing her book, debt advisers told her that the most extreme case they had come across was a man who had hidden his £147,000 debt from his wife for years. They also said that 32% of people who went to see them hadn't told their partners that they were seeking debt advice. The trouble is that people often think they'll be able to pay off what they owe but, by the time they discover that things are just getting worse, it has become more of an issue about trust than money. The best approach is to tell your partner and hope they understand, rather than wait for a debt collector to appear on your doorstep or for them to find a letter from a creditor.

4  To spend or not to spend

Sometimes couples disagree about how their money should be used. While some people think that it's for spending, others just want to save it so that they feel secure. Couples sometimes fall out over whether to spend money on fixing up the house or going on a holiday. If one has an expensive hobby it can also cause friction – for example, if one is left at home looking at a shabby sofa while their partner is on the golf course. However, while it's easy to feel that this is unfair, a hobby can be a way to relieve the stress of everyday life, which can strengthen a relationship as a result.

5  Different attitudes to risk

Sometimes you may want to invest differently to your partner. Sarah believes, for example, that women are more aware of risk than men, preferring to understand what the consequences would be of a failed investment rather than simply jumping at the opportunity for bigger rewards. This may be because they tend to be the ones who give up work when they have children and so there is less certainty about their income, she says. While men are frequently happy to invest in the stock market, many women prefer greater certainty about their returns and do not wish to lock their money away for long periods. The answer to this may be to diversify your investment portfolio to satisfy both your attitudes to risk.

Sarah Pennells worked as a reporter and producer on Radio 4's Moneybox. She has written three personal finance books and runs her own financial website for women, savvywoman.co.uk. Sarah continues to freelance for leading financial media.

Disclaimer: The views expressed in this article are the author's own and not necessarily the views of HSBC. They are not intended to give advice.

via financialplanning.hsbc.co.uk