Freelancers moving in with their partners could carry more risk
When you are a freelancer you’ll probably have to talk about money earlier in your relationship
Hate talking about money when you’re all loved up? Well, if you love the person you are with and you have built a freelance business, the loving thing to do is to have the money talk now rather than later. Sarah Coles of Hargreaves Lansdowne, gives you some pointers on what to discuss and why.
When it comes to the often awkward topic of money early on in a relationship, problems can surface if one of you is less money-savvy than the other, especially when it means things like missed bills and debts.
“Some couples prefer to leave all their financial matters in the hands of the person who is better with cash, but this creates issues of its own,” says Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.
The HL Savings & Resilience Barometer in January showed that couples who make their financial plans together do far better than those where one person is in charge – they’re more likely to have money left at the end of the month, and more likely to save.
Coles says there are additional risks if one of you loses touch with their finances.
If one of you is self-employed there’s a “third person” in the relationship: the business. That is why it is vital for business accounts to be separate from personal accounts so the business owner can ensure that business-related bills can be paid and not eaten up by personal spending.
Steps to take before you move in together
Coles reminds us that all relationships eventually end – either through a split or a bereavement – and this is the worst possible time for anyone to have to get their head around money.
“Instead,” she says, “there are a few approaches that can help protect your finances while ensuring neither of you loses track.”
Coles outlines some tips on how to approach that money talk here:
- Have the money conversation as early as possible. Don’t wait until you’ve already committed. You need to know where you stand well before then. This needs to cover where you both stand right now – including any debts. It should also explore your attitude towards money and your goals. You don’t have to agree about everything, but it can help to know where they’re coming from.
- Set some financial ground rules. You don’t need to share every aspect of your finances with one another. Our research shows that 15% of people agree to keep some financial things to themselves when they’re in a couple. However, you need to set some rules together about things like debt and bills and ensure you talk to each other in plenty of time if it looks like you’re going to fall foul of those rules. We all make mistakes, but we need to commit to being honest when we do.
- Think carefully before moving in together: If your partner’s lack of money skills has led to real problems, it becomes even more of an issue if you want to move in together. At that point you need to know where you stand and then make a decision: can you cope financially if they can’t pay their way, and are you prepared to do so? These are two separate issues, and you shouldn’t feel under pressure to say yes to either of them.
- Understand the risk before you take out joint financial products: If you have joint financial products, your credit records will be linked. This doesn’t happen automatically when you move in together, but if you have a joint account or any other financial products together, a link will be formed. It means if your partner makes financial mistakes and runs up debts or misses payments, it will affect your ability to borrow.
- Use direct debits: This can be a great way to ensure that even if your partner is terrible at saving, the money goes out of their account each month without them having to think about it. It’s also a useful way to ensure that all the bills are covered, If there’s a chance your partner won’t have the cash to cover the direct debit by the time the bills arrive, you can set up an account for bills that you both pay into on payday. Just bear in mind that if you run this as a joint account, they can spend the cash on things other than bills, and you’ll have linked your credit reports.
- Consider joint finances. This can help by ensuring you both have complete clarity over your finances and can discuss every decision. However, you need to be sure you’re not just creating an opportunity to have more rows – or for one of you to run up debts that you’re both responsible for. Of course, your credit reports will be linked too.
- Talk about retirement. If you expect to retire together, you need to plan together. This means having a rough idea of what retirement is going to look like, what it will cost, and what you both need to do to afford it.
Other findings from the survey
- Married people are slightly more likely to say they’re both the same (40%) when it comes to money.
- Basic rate taxpayers are more likely to say they’re best at managing money (44%), and less likely to say their partner is better than them (16%).
- 41% of those with cash savings say they’re better with money, and 23% of those without savings say their partner is.