It's Valentine's Day so here are five mistakes we're prone to making when we're in love...
Today marks Valentine’s Day - a celebration for all lovers across the globe.
Personally, however, I can’t stand the day. So instead of focusing on the day itself, I’m going to look at the financial side of falling in love.
When you’re caught up in all the excitement of falling in love, it’s easy to forget about your finances. After all, you’re far too busy enjoying dining out at fancy restaurants and jetting off on romantic getaways to give your bank balance a second thought.
But when the relationship starts to get a little more serious, you do need to start thinking about your finances. Here, I’m going to reveal five silly financial mistakes we’re prone to making when we’re in love.
1. Not talking about your finances
Talking about money isn’t the most comfortable of topics. But if your relationship is taking a serious turn and you think this might be ‘the one’, talking about your finances is important.
After all, you don’t want to sign up for a lifetime of marriage, only to discover later on that your partner is in masses of debt and is relying on you to help him/her get out of it.
If you’re moving in together, you need to sit down and talk about your financial position. This includes how much each of you earns – because if one of you earns significantly more than the other, it may be fairer for that person to contribute more to the bills and so on.
That said, it’s important to make sure both of you are definitely happy with this arrangement. Find out more in How to move in with a partner.
2. Not checking your credit rating
Similarly, it’s a good idea for both of you to check your credit rating. That’s because if you decide to make a joint application for anything, be it a personal loan, mortgage or joint bank account, this will create a financial association between the two of you and this will appear on your credit report.
This means that if your partner has a less-than-perfect credit report, it will bring yours down too.
Having a good credit rating can be the key to financial success but with so many myths surrounding what affects your credit score, it can all get a bit confusing. Emma Roberts unveils the 5 biggest credit rating myths that could destroy your finances and how to beat them.
What’s more, once you’re financially associated with each other, you become ‘jointly and severally liable for repayments’ on any joint debts. In other words, you’ll both be responsible for repaying any bills or debts you’ve taken out together. And if your partner can’t keep up with their half of the payments, you’ll be the one being chased for the full payment.
As a result, it’s well worth taking a look at your own and your partner’s credit report before you jointly apply for any deals. That way you won’t be kept in the dark and you won't have any unpleasant surprises.
You can do this by signing up for a 30-day free trial with Experian through lovemoney.com. Just remember to cancel your subscription before the trial period is over to avoid getting charged.
Alternatively, you can pay £2 to receive your credit report from Experian, Equifax, or CallCredit.
3. Not keeping separate accounts
When you’re in love, it’s easy to say ‘my money is yours, darling’. But do you really mean it?
Opening a joint current account might seem like a romantic and practical thing to do. But it can also lead to trouble if you’re not careful. If you don’t keep your own individual accounts and instead put both of your salaries straight into your joint account, it can be difficult to establish whose money is whose.
What’s more, if one of you earns considerably less than the other, and decides to go on a shopping spree with your joint account debit card (or your joint credit card, for that matter), this can rapidly lead to arguments.
So to avoid this, I’d suggest keeping your own separate accounts as well as opening a joint current account. That way, the two of you can agree to put in a certain amount of money each month from your own account into the joint account to pay for household bills, food, and your mortgage/rent. If you’re lucky enough to have anything left over at the end of the month, you can treat yourselves to a meal out!
This can also help with your own budgeting – after all, once all of your expenses have gone out of your own individual current account, you’ll know what you have left over for socialising, holidays and saving.
4. Having no life insurance
Life insurance isn’t the most exciting of topics. However, it is important when it comes to relationships. If you’re buying a home together you need enough protection in place to ensure your partner won’t be stuck with the entire mortgage debt should the worst happen to you.
And if you later have children, you need to ensure you have enough cover in place so that your partner can continue to support the family financially. Read Eleven reasons why you need more life insurance to find out more.
John Fitzsimons looks at three simple ways to cut the amount you spend on your life insurance.
Life insurance doesn’t have to be expensive either. In fact, it can cost from as little as £5 a month and is well worth it! Take a look at our life insurance comparison centre to find out more.
5. Not saving for the future
Finally, it can be all too easy to fritter away your money now, but if you’re in a relationship for the long-term, you need to plan ahead.
So make sure you set a budget that you know you can both stick to and put a little money aside each month into a savings account so that you’ve got something to fall back on should you need it.
Tying in with this, it may seem a long way off but you should also be thinking about your retirement. The sooner you start to think about your retirement, the longer your investments will have to grow.
So make sure you both think about starting a pension, or increasing your contributions to your pension if you already have one. And if you’re planning to use your ISA or property instead to support your retirement, again, don’t leave it too late.
So however romantic you want to be this Valentine’s Day, don’t forget that the financial things matter too!
More: Seven ways to make money from Valentine’s Day | Lidl Valentine’s Day chocolates taste best!