Couples Need to do Joint Financial Planning

26 January 2022 Daryl Coker, Advisory Partner and Wealth Management Specialist at Citadel
Daryl Coker, Advisory Partner and Wealth Management Specialist at Citadel

Daryl Coker, Advisory Partner and Wealth Management Specialist at Citadel

One of the most significant financial relationships one can have in life is the one with a life partner or spouse. Partners need to plan for financial security and success together. Joint financial planning for all the milestones of life is the secret to a sturdy and harmonious financial relationship with your other half, advises Daryl Coker, a wealth management specialist and Advisory Partner at Citadel, who often counsels couples on how to make a success of their finances together.

How to Create Financial Cohesion as a Couple

1. Financial communication

There is a saying that “love cannot make a home where lies and secrets sleep.” It’s important for partners to be honest about their financial realities and vision for the future. Honesty builds trust, and when there is trust, there can also be successful collaboration and a sense of security. Communication around financial needs, worries and goals will become more important as you work to build a partnership that meets the requirements of all life’s phases, from early marriage, to parenthood, sickness and health, retirement and old age. Joint planning and clear communication can help all couples face the ups and downs of a life together. Especially in times of volatility – like the recession and pandemic that we are currently navigating – couples need to talk openly and work together.

2. Joint budgeting

A budget is the foundation and starting point to any financial plan, even for high-net-worth couples. The trick to making it work is ensuring that both partners can and want to stick to it. There are many interactive, real-time online tools that can help you manage a household budget and goals together. Both parties should agree that the budget is fair and just. Whatever may be left over of the monthly budget can be saved or invested to meet bigger financial goals in the future, whatever your greater ambitions may be.

3. Joint financial goal setting

Couples need to agree on their financial goals and what they wish to prioritise – it’s counter-productive if the partners each go in their own conflicting financial directions. Be conscious about how much is needed for retirement, property investments, vehicles, education, travel or savings. It’s important to respect each other’s wishes, and always think long term. Working in tandem towards the same goals can build trust and unity, and significant long-term prosperity.

4. Career and family planning

Globally, it is outdated to think that only women tend to take a hiatus from their careers to raise children. Where childcare can be expensive, whoever earns the most between the couple often becomes the sole breadwinner while the other stays home with the children. If you and your partner are planning to have a family, it is important to have discussions about family planning in relation to each partner’s career and earning power.

5. Setting joint investment goals including retirement goals

To achieve long-term joint financial success, couples must devise a unified investment strategy. This could include having an overall view of their collective investments, knowing what each partner is invested in, determining how the overall investment portfolio can be better diversified to mitigate against risks in the financial markets and seeing a financial advisor together to come up with an investment strategy that packs a bigger punch together. It is also useful to understand what savings vehicles you are each invested in, whether this be pension funds, retirement annuities or tax-free savings accounts, so that you don’t over-prioritise one area, but neglect another. For instance, it could be dangerous to have all your eggs in just one asset class basket and not to diversify your portfolio adequately for long-term stability and growth.

6. Be clear about bank accounts and boundaries

Depending on your circumstances, you may decide to keep separate bank accounts, have a joint account, or do a combination of the two. Each method has its pros and cons, which partners need to discuss and agree on. The advantage of a joint account is budgeting, but it can become problematic if both partners are not equally respectful. Separate bank accounts allow each partner more freedom and autonomy, but can lead to an unbalanced distribution of expenses.

7. Establish your will

Ensuring that your partner and children will be cared for in the event of your death is one of the most important acts of love for any couple. When there are questions over assets and liabilities in the estate, it can cause family distress. It is also important to talk about estate planning when entering a second marriage, to ensure that your spouse understands whether you may be leaving some assets to children from a previous marriage, or whether former spouses will receive anything to cover maintenance. Equally, it is essential that your partner can find the details of any life policies, retirement funds or other investments you may have, and also knows who the beneficiaries are.


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