Iona Bain

A Little Bit Richer

Iona Bain and guests will help you make smart money choices and get to grips with your finances for the longer term.

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Speaker 1: This series is brought to you by L&G, helping you build a future that's a little bit richer.

Iona: Hello and welcome to A Little Bit Richer with me, Iona Bain, brought to you by L&G. Now, money can be an awkward discussion in any relationship, particularly with your other half. So when relationships transition from the fun and frolics of dating to saving and budgeting for a future together, it's important to get the fundamentals right.

Friend of the show, Bola Sol is back with some helpful ways that couples can manage their money in a way that suits them.

Financial advisor, Bola, is also a money columnist and author of Your Money Life and How To Save It. You might have seen her videos online on red financial flags in relationships. So, there really is nobody better to chat about this thorny subject. Welcome back, Bola.

Bola:  Hi Iona. Thanks for having me.

Iona: So relationships are not all about the money, obviously.

Bola: Of course not.

Iona: But why do your finances matter when you are in a relationship with someone?

Bola: Because money is a tool that we all have to use, and if we don't figure out how we're aligned on our finances, there can be a lot of mismatches in the relationship. And those mismatches can come in the form of the type of house you may want together, the type of future you may want together, if you do want children, the type of lifestyle that you want for those children, how you plan to retire, and what's important to you.

So finance is a very big part of relationships, and there are definitely some stats that show it's one of the top five reasons people do get divorced.

Iona: And is this an issue that you come across a lot in the work that you do? Do people come to you with differing approaches to finances within their relationships, and does that cause tension?

Bola: Yes, it does. I would say there's some circumstances that stick out to me where some people are suffering in silence financially, they're having to take charge of a lot of costs, and they feel quite guilty about expressing that.

And that's quite sad, because then it now means they have to confront their partner and say, " I don't feel supported here. I need you to support me more." And sometimes the response that they get, it could just be, " Well, you've been dealing with it so far, keep dealing with it," and that can cause so much tension in any relationship.

Iona: And are there aspects of modern dating that can exacerbate these issues? For instance, when you're dating online, perhaps you see someone present a lifestyle that's actually quite different to how they manage their finances and maybe you don't get to find out what their financial situation is until quite a bit later on in the relationship.

Bola: Yeah, and that's why communication's important, because there's only so much you can see online and take from someone's lifestyle, which is why you can't just take everything at face value. So I think it is key that you are having those discussions about maybe where are you right now when it comes to your financial priorities?

Iona: And do people change their attitudes towards money once they get into relationships? Do they sometimes shift and adapt and evolve because there is someone now significant in their life that they want to share goals with, or is it a mistake to assume that will automatically happen?

Bola: I think it varies person to person. So, when I got into my relationship now, I've felt a sense of accountability about my decisions, about my spending and my why, because we're planning to share life together. So that just means I can't just make decisions on my own.

And I have seen some people start to absolve themselves of responsibility when they get into relationships. So it becomes, " I don't have to think about this." And that is also irresponsible because it puts a lot of pressure on one person to essentially be the adult in the relationship when both of you are adults.

Iona: How can we avoid slipping into those roles within our relationships, and maybe stepping up and becoming a bit more equal in how we manage things?

Bola: I think you used an important term there, which is part of the solution, which is stepping up. Even if some people they don't feel very confident about finances, it's still worth asking questions and also potentially saying, " What can I do to help in the situation?"

And then potentially, over time, they could take on certain responsibilities. That could be being the one who initiates the conversation about the budget. It could also be taking on particular bills and ensuring that that's covered every single month.

Iona: And what are your thoughts on maintaining your own independence in a relationship versus joining your finances with someone else? Because lots of couples might feel like they should have a joint account because that means that they can have transparency, that can make joint planning a lot easier. But on the other hand, having your own financial account means having some independence and some privacy. What are your thoughts there on achieving the right balance?

Bola: I think the right balance comes from having four accounts, which is joint savings, a joint current account for bills, and then individual savings and an individual current.

Iona: Okay, so not just having a joint account but also having a joint savings account as well?

Bola: Yeah, absolutely. Absolutely. It's up to you, really, as a couple. Do you want to do all of your savings together, and if so, what does that look like? So are there any T's and C's that are part of that? So for example, if you plan to take out a certain amount of money, the other partner needs to be very aware of that.

And maybe you need joint signatures, so I think that some things need to be put in place, because I have heard of circumstances where money has been taken from joint savings and used in ways in which it wasn't agreed on. So you do have to find a way to make that work.

Iona: You've brought up a really important point there. How can you protect yourself? Because unfortunately, sometimes you might end up in a relationship where that other person isn't what they seem, and we know unfortunately financial and economic abuse can and does happen. What can you do to protect yourself against anything like that happening?

Bola: Be careful about the decisions you make, and don't feel like you have to make them under duress or very quickly. At times when you are in a relationship, emotions are such a big part of that. It's very easy for someone to potentially try to pressure you to make a decision, but it's okay to say, " I'm going to come back to you on that," and do what's in your best interest, not because of you fear anything.

Also, wherever possible, I'd say speak to someone that you are close with and you trust who knows you, because at times, a way financial abuse or economic abuse can start is through isolation. If you can just have that one person, that confidant who you can tell who can maybe, where you see fit, give you some advice to ensure that you are not now on the borderline of being financially abused, because some people don't see it coming.

Iona: No. And being aware of the practical risks as well, of having a joint account with someone, or taking out a credit card or a mortgage with them. Many people might not realize that by doing that, they're also then potentially taking on their partner's debt. Just tell me a little bit about why we need to be cautious if we borrow money or we join up our finances with someone.

Bola: Yeah. So, if there's a legal civil partnership or you are married, and even if you get a joint account and you're not married, sometimes your credit scores can be joined together. And what it means, is that maybe a debt that has been taken on by one party means that if anything is to happen to that debt that you have to take care of it. Or essentially, now your credit score can change as a result of that. So I think what's really key is that you're having discussions about how you use and manage credit as well. And I think it's so key that we don't let emotions get in the way.

Iona: It's so difficult though, because apart from anything in our culture, we are encouraged to buy into romance and to let the romance sweep us off our feet. And if we fall in love, it's intoxicating, and common sense can kind of go out of the window, and it can feel deeply unromantic and deeply unsexy to have any kind of conversation about money. Have you got any advice about how we can get over that feeling of, " It'll spoil the romance if I bring any of this up"?

Bola: I think you have to think about the long- term effects of not bringing it up. So often people go into things and then it's a sense of regret, " Oh, I wish I did bring this up earlier." So I just say bring it up now, because you also get to see how your partner responds to those things, and their response is incredibly important.

So, when you bring up finances, are they short with you? Are they snappy? You have to look at all those things. Are they avoidant or do they communicate with you and say, " Okay, I can do this next week and so on and so on"? Sometimes you have to talk about the hard things and do the hard things. That's how long- term relationships work. So, I just say just see finance as one part of that as opposed to all of it.

Iona: Every relationship is different, but are there solid foundations that we can build on when it comes to sharing our finances and doing it in a way that feels healthy and equal?

Bola: I think if every month or so you are both able to talk about your finances, I think that's great. Whether it's a thing where you're talking about income or you're talking about outgoings, for example, I think that's an important conversation to have. Also, just having someone as a soundboard, " What do you think of this?" I'd like to do this but this isn't making sense," and so on.

Iona: Because if you're wanting to share your life with that person, you need to be able to talk about as much of your life as possible, and that includes your finances. So to have it as a kind of blind spot, as something that you just don't discuss in a relationship as a no- go zone, that doesn't feel sustainable long-term.

Bola: I agree. I think we have to be able to be vulnerable with each other in so many different ways.

Iona: What if you get into a relationship with somebody who is maybe not as good with their finances as you are with yours? Or maybe they're doing better with their finances than you are and there is a bit of a gap there, how can one partner help the other get to a better place?

Bola: I would say maybe have couple planning meetings, and also try to provide a sense of support to them. Okay, maybe you've got a credit card debt. Have you looked at the options? Have you looked at a 0% balance transfer card, for example? So it could be helping them with that, but it also could be bringing up the conversation in a very gentle way as a way to keep them accountable, whether that is paying off debt or whether that's savings. I think showing that you are involved and you care is so important.

Iona: And then when it comes to whether you should split your finances 50- 50 or if it should be based on income, what's your view on that?

Bola: I think it's really important for you to decide what's fair to each other, and you have to ask yourself if the roles were reversed, how would you like things to be handled? So let's say, for example, you are in the position where you are earning more money, what do you do if you're not in the position where you're earning more money? How would you like to be treated by that partner if things were to change and it was the other way around? Would you say, " I still feel like that's fair"?

Iona: And do you have any advice for how you can manage differing attitudes to spending within relationships? Let's say one partner still wants to go on lots of holidays and still wants to live a lavish lifestyle, but you both have goals that you want to save for. How can you talk about that in a way that doesn't feel confrontational, that's not going to create tension?

Bola: If one person differs from the other and they want to maybe live more lavishly, yeah, I think it's important to ask, does it get in the way of your priorities and the joint goals that you have together? And if so, then it's maybe time to sacrifice some of them for what you're building.

Iona: Because I do think you will have different spending habits if you are single compared to if you're in a serious long- term relationship, and your finances are a pretty unforgiving mirror of what's important to you. So once you are in that relationship, if you're still spending like you're single, then maybe there is that mismatch there and you're not quite ready for that commitment. And that's why finances actually are a really important area for us to look at. They're a barometer, maybe, of the health of our relationship in many ways, even if we don't like to admit it.

Bola: Yeah, I couldn't agree more with that.

Iona: Are there any particular red flags that we should be mindful of or when it comes to our partners and their finances?

Bola: Yes. So, I'd say the first red flag is complete avoidance of talking about money. I don't agree with that at all, and I think that is enough of a red flag for you to question the relationship entirely. And you get to choose how you'd move on from that because you're going to have to make so many joint decisions where money is involved.

Iona: So in a way, if you have that conversation early on and they tell you, " I haven't always been great with my finances and I still have these issues that I really want to get over," that's better than them saying, " I don't want to talk about this at all".

Bola: Absolutely, because they are still communicating with you.

Iona: So, I'm keen to ask as well about how much people are maybe looking to relationships as a way to shore up their financial position, which is very understandable at the moment, because we are in a tough economic climate and life is easier when you can share your expenses with someone else. But are there dangers there, that we maybe seek out other people, really, more for the financial security that they offer, rather than all the other good things that we should be able to get from a relationship?

Bola: Yeah. You have to be honest with yourself. And I say that because maybe no one will question you, but you have to be able to question yourself. And some people may come out and say, " Look, right now, the financial stability is important," but you have to rank it. One of the things that I do, and I've done this with my partner, is I know I would share a shed or a mansion with him. And that's enough for me to know, " Okay, this is my person."

Iona: It really is a case for richer or poorer?

Bola: Yeah, exactly. If the person you get with tomorrow, based on their cash flow, no longer has that money, do you still like them? It's incredibly important. And that's why I always say character over cash flow. Cash flow can change. And when it does, are you still really riding with that person or is it kind of like, " Oh, this doesn't work for me anymore"?

Iona: Well, that's why Pride and Prejudice works. It would not work if Elizabeth Bennet at the end turned around and said, " Well, I still don't like Mr. Darcy, but he's worth a few bob."

Bola: Yeah, exactly. Exactly. Things can go up or down, and that goes for either of you. Sometimes you are able to give more and then other times you give less, and you kind of take it in turns.

Iona: Absolutely. So, how can we talk about money and not let it affect our relationship? How can we continue to have fun with one another and still be able to keep our eye on those important goals?

Bola: I would say make sure that there's a time and a place that you speak about it so that no one feels like they're caught off guard. Also, make sure the timing is right. If someone has a long day and things like that, read those signs and potentially just ask, " Do you want to do this another day?" But don't keep putting it off. That's the thing. Still have the hard conversations.

And I'd say talk about the intricacies of finances. So, talk about life insurance, talk about legal Powers of Attorney and future income, where you want to be, investments, " Are we making those together?" Talk about pensions. Where are you both from a pension perspective? And then of course, there's the everyday budgeting and having your financial goals.

Iona: So we've ranged over so much there. It can be difficult to boil this down to three tips for managing your finances with a partner, but what would your top three tips be?

Bola: Make sure you speak about it regularly. It could be once a month, it could be once every two months, but don't let too much time pass. So consistency is important. Number two, always, always speak with love. I can't say that enough. Never speak with an accusatory tone or, " I'm better at you than finances" and so on. And with number three, and this is more on the basis of marriage and long- term futures, ensure you understand that essentially it's kind of like one income.

If you're not planning to do this life alone, there is no point you saying, " Oh, I make £6k and they make £2, you make £8k. And that's just an example. It can be a different number. That's something that's important for everyone to learn, because the moment you get into, " This is my money and this is their money," I think that's very dangerous territory. Eventually, you have to see it as, " This is our money, what are we going to do with it?"

Iona: Because ultimately, £8k is better than £6k or £2k.

Bola: Exactly.

Iona: But it's about understanding what you can do together with that money, and making sure you're both on the same page and happy with it.

Bola: Yeah.

Iona: Brilliant. Bola Sol, this has been so, so helpful. Thank you.

Bola: Thank you.

Iona: Thank you so much, Bola. We've got so many ideas there for how we can plan our financial futures. Brilliant stuff. Next time, L&G's Paula Llewellyn will be here to tell us what might be changing with your workplace pension and why it matters. I'd love it if you could follow the podcast, leave us a review and help others get a little bit richer, too.

You can keep up with the show on TikTok and Instagram @legalandgeneral, where we'll be sharing loads of behind the scenes content. And you can catch our full video episodes on YouTube. Thanks for listening. Until next time, see you soon.

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