The financial benefits of being in a relationship

Are there any financial benefits to being married? Is being in a relationship good for your budget? We take a look into the financial perks of being attached.
Couple holding hands | Wealthify
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If you’ve read our post on the financial perks of being single and thought, “but I’m in a relationship, what do I get” then this one is for you. The difficulty here is that not every relationship is the same and there are many factors that can impact your finances – for a start, whether or not it’s an equal and open relationship when it comes to money.

This approach may not suit everyone, and that’s fine, but if you’re in a relationship pooling your resources together can make it easier to take on your financial challenges. Being able to budget for both salaries and all expenses in one go can provide a better understanding of what you each spend your money on.

 

What is an equal relationship?
An equal relationship is about working together, you and your partner against the world. It’s not about you having to take on financial burdens alone because money is a taboo topic. But you don’t have to be on the same salary to be in an equal relationship. It’s all about being open and honest with each other and working together, providing both emotional and financial support.

While how you and your partner work together is outside of our remit of expertise, we can tell you how advantageous this can be from the financial point of view.

 

What are the main financial perks of being in a relationship?
First things first, there are two of you, which potentially means two salaries. And while that could mean that you’re able to double the amount of money you have available, you could take it that you’re able to live on one person’s salary and save the other.

Living modestly like this may help you reach your financial goals a lot sooner – whether that’s early retirement, buying a luxury yacht, or just putting your child through university without a loan. Being able to save an entire salary each month could make all of this a reality.

For example, say you earn £2,000 a month after tax and exclusions and put this straight into a personal pension. If you did this every month from your 30th birthday through till you reach 55, then you could retire with around £1,187,693 in your pension pot.[1]While this is a lot to save each month, it does help to give you an idea of what’s possible if one of your salaries is freed up for achieving financial goals. But remember that with investing, returns aren’t guaranteed and there’s a risk you could end up with less than you initially put in. Also if you’re paying into a pension, it’s important to consider tax as your tax treatment will depend on your personal circumstances and financial situation.

But of course, not everyone can – or may not even want – to do this, so what are the other benefits to being in a relationship?

 

Keeping each other in check
When you’re single there’s no accountability for the money, you spend. It’s your money, and nobody is reliant on you so you can do what you want – unless you’re a single parent, in that case, you need to think about your little one. That sounds great until you realise that you’re spending a lot of money each month on luxuries and not putting aside enough for the future.

Being in a relationship provides that little bit of accountability, as you can both check up on your joint finances to see if you’re on track with your financial goals and budget. And, if you’re not, then you may have some making up to do – of course, it may be worth adding a bit of wiggle room for nice things to avoid this situation.

 

A full household budget
Having a full picture of your household budget can give you a much better idea of how much money you’ll have after key expenses each month. The beauty of taking this approach means that not only do you get to split things like bills down the middle (or however you agree to do it) but you’ll also share the savings and fun fund. This way, say if your living costs are only 30% of your joint income, you’ll have 70% expendable income to decide what to do with.

Not only could this make your living costs more manageable, but it might mean that it’s easier for you to save money each month. By putting together a monthly budget, the two of you can decide where your priorities lie – would you rather live lavishly each month, or do you want to save up for a dream holiday or your next home? And, of course, there is always a middle ground you could reach as well.

 

Spend less on dates
The numbers show that British singletons spend an average of £89 on a date and typically go on a date a week.[2] When you’re in a relationship, the number of dates you go on typically drops to once a month, or even less. But studies have shown that couples who go out monthly had the highest odds of staying together[3]. So, if you’re reducing the number of dates you go on each month by at least three, you could be saving around £267 a month just on dates!

 

And what if you tie the knot?
Getting married can be expensive – in fact, according to the latest figures the average wedding in 2019 cost £31,974![4] But it doesn’t have to be – there are plenty of things you can do to save money on your wedding. If you’ve already gotten hitched, then you may well know about some of the tax benefits of marriage, if not, here’s what you could be getting:

  • The Marriage Allowance – this government initiative could give you a tax break of up to £250 a year by transferring £1,250 of your allowance to your partner.
  • State pension benefits – while this is a bit morbid, you’ve already said ‘til death do us part’, so it could be good to know that if you partner dies, you could be eligible for a larger state pension. It’s also worth noting that many workplace and private pension schemes pass the benefits on to the surviving partner in a marriage.
  • No inheritance tax – continuing this thread, if your partner dies first then you won’t have to pay any inheritance tax, and then as their allowance wasn’t used it could be passed onto you – effectively giving you double the allowance[5].
  • Move money around – shifting around money is something that you may end up doing in a marriage, someone may have better interest rates, or you’re moving money from your joint account to your private account then to their private account. It’s life, it happens. Luckily, when you’re married, you can move your money, savings, and investments freely between the two of you.

That’s a lot to think about, and with many of these perks coming in way down the line, it may be worth planning for the future. Depending on how serious your relationship is, your circumstances, and your age, getting married could provide some real financial perks. And it doesn’t need to be the flashy £30,000 affair either – you could get married from as little as £35 per person and could still receive benefits listed above.

 

References:

1: This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £890,552. If markets perform better, your return could be £1,667,551. Values correct as of 17/08/2020

2: https://www.elitesingles.co.uk/em/from-single-to-couple/date-night-cost

3: https://www.theknot.com/content/successful-marriage-date-night-study

4: https://www.hitched.co.uk/wedding-planning/organising-and-planning/the-average-wedding-cost-in-the-uk-revealed/

5: https://www.which.co.uk/money/tax/inheritance-tax/inheritance-tax-for-married-couples-and-civil-partners-a1vvf7h17jpc

 

The tax treatment depends on your individual circumstances and may be subject to change in the future.

 

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

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