3 excellent reasons to make a financial plan with a partner

It may not be romantic but sharing a financial plan with your partner can be hugely rewarding.

Whether you’ve been together for years or are embarking on a new relationship, a joint plan could help you build a more secure financial future. That’s just one great reason to plan together – here are three more excellent reasons to talk about money and form your financial plan as a couple.

1. Joint decisions often turn out to be better – for your finances and your relationship

According to a 2020 survey by Artemis Strategy Group, more than 70% of people have a different money management style than their partner. Half of people also said financial issues cause most stress in their lives. And 31% couples clash over their finances at least once a month.

With figures like these, it’s easy to see why it’s important to ensure that you and your partner are on the same page.

Decisions made together will usually be better than individual ones, plus you’ll both be invested in the outcome.

Whether you’re married or in a long-term relationship, planning your financial strategy as a team could make a big difference to your happiness and wealth.

2. You can ensure your money habits match your goals

Establishing an open dialogue about money can help ensure that your joint and individual spending habits align with your overall financial goals. This check and balance can help you both gain confidence in your long-term plans.

Budgeting together can help you form a clear idea of what’s coming in, how much is going out, and how much you’re able to save each month.

If your money habits don't match your goals, take time to talk about where you could make changes. Ultimately, this could lead to deeper discussion and better understanding of what's achievable for your financial future and goals.

3. Working together can help you maximise tax-efficient savings

By working together with your spouse or civil partner, you could gain tax advantages when arranging savings, investments, and pensions.

The Marriage Allowance

The Marriage Allowance is one small perk not to be forgotten. If one of you has earnings below the basic-rate tax band, the lower earner can transfer £1,260 of their personal allowance to the higher-earning spouse or civil partner. According to the government, this small act could help to trim your overall tax bill by up to £252 in the 2022/23 tax year.

Investing

If you have stocks and shares, where possible you should hold them in an ISA. You’ll each have an ISA allowance of £20,000 (2022/23). So, if you’ve used up your own personal ISA allowance for the year, you could use your spouse’s allowance to save more and take advantage of the tax benefits.

Read more: 5 great reasons ISAs should form part of your investment strategy

If you’ve both maximised your ISA allowances, the next buffer to consider is with Capital Gains Tax (CGT). Because you can transfer assets to each other without incurring a tax bill, you should be able to make full use of the annual exempt amount.

The annual exempt amount for CGT is £12,300 in the 2022/23 tax year. This means that if you hold investments in joint names, you could take up to £24,600 worth of gains on eligible assets without having to pay CGT.

There are lower and higher rates of CGT so be sure to check yours, as it can be quite complex. If you can ensure that the lower-rated partner makes the excess gain, then you should be able to reduce your tax bill.

We can help you understand the rules and ensure that you make the right moves with your money, at the right time. Please get in touch if you’d like to understand more about ways to achieve this.

Remember, the annual exempt amount will fall to £6,000 in April 2023 – this will mean that you will only be able to make profits of £6,000 on non-ISA investments, or £12,000 as a couple.

Pension savings

If one of you is a higher-rate taxpayer and the other a basic-rate taxpayer, you may want to consider the financial benefits of the lower-rated partner paying into a pension in their spouse’s name. Doing this will double the tax relief. However, you’ll need to engage a solicitor to secure pension rights for the lower-earning spouse in the event that you separate.

Read more: 3 practical ways to divide pension savings and protect your future on divorce

Sharing a financial planner can help you achieve your goals

Approaching your financial plan as a tight team, can help each of you understand your position. The open dialogue that it will require could also strengthen your partnership and increase the chances of you both achieving your life goals.

Sounds great, right? But balancing different goals and views on money can be a challenge – which is where we come in.

However you decide to spend your future or your money, we can help you and your partner put together a joint financial plan that works for both of you.

Get in touch

If you and your partner would like to explore how a joint financial plan could benefit you, please get in touch.

Email info@lebc-aspira.com or call us on 01454 632 495.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The Financial Conduct Authority does not regulate taxation advice.