Are your finances ready for the next step? The essential things you need to know about becoming a financial couple

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Whether you’re about to move in together or getting married, here’s what you need to know about combining forces and becoming a financial couple. How much do you really know about your partner? Sure, you know their favourite dish and what they’re currently watching on Netflix, but what about if they’re any good with money? Do they pay their bills on time? Have they got any debt? Do they have any savings?

Thinking about money isn’t exactly romantic but becoming a financial couple – which is what formally happens the moment you start sharing responsibility for anything to do with money and usually occurs when you move in together or tie the knot – is a major commitment.

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It’s about combining some of your most private affairs and some of Britain’s major companies and the authorities alike will be able to view some of that shared information too. This is why it’s so important to protect yourselves when you join financial forces and take the next step.

Here’s a list of things to do to keep your joint finances in the best of health.

1. Talk about money

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Nobody enjoys talking about money but being upfront about who earns what, who’s going to pay for what, and when and how much you can both afford to spend on various things will help your relationship in the long run.

And you need to make sure you have the conversation every time your circumstances change – such as when you get promoted and your pay goes up, or when you finally clear your credit card balance, or switch it on to a new deal, or update your Sky package.

2. Set up a joint account

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If you want to make sure the bills are paid promptly each month and to keep a record of your spending, a current account opened in joint names can be a useful tool.

You can decide how much to contribute each month and set up a standing order to transfer the money in from your individual accounts on a set date if the payment will be the same each month.  And then you can arrange direct debits for all your regular bills to make sure you never miss a payment or pay late. You could also consider arranging an overdraft facility.

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While you will usually be charged interest for this type of borrowing, some accounts come with interest-free overdraft buffers that give you a grace period should any unexpected spending tip you into the red temporarily.

3. Check your credit rating regularly

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Becoming a financial couple affects your chances of being able to secure credit now and in the future – that’s everything from taking out a new smartphone contract to getting a mortgage.

This is because every time you apply to borrow money on your own or as part of a couple, a lender will perform a series of background checks to confirm your identity and ability to make repayments.

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To do this, it will take steps to check you are who you say you are, where you work and in some instances what you earn, as well as confirming you live at the address you give.

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It will then look to see if anyone else is linked to your application, or your address and look for any evidence of problem debt. Should it discover any issues with late payments, for example, it may decide to offer you a loan at a higher rate of interest or it may reject your application altogether.

Your credit rating gives lenders an indication of your trustworthiness as a borrower and it goes up and down as your circumstances change. So by keeping an eye on it, you should be aware of any adverse changes you may need to deal with – whether they are your issues that could affect your partner, or vice versa.

The big credit reference agencies – Experian, Equifax and Callcredit – are obliged by law to give you one-off access to your information for £2 a time. They tend to offer free trials too but make sure you cancel by the deadline or you’ll be charged a monthly fee.

4. Protect yourselves

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Unfortunately, life isn’t always kind. Relationships break down, people lose their jobs and get ill. So it’s important to ask yourself from time to time what would happen to you or your partner financially if the worst were to happen.

Once you have the answers you can set about putting in place any necessary protection. For example, if you’re buying a property together but not planning on getting married, you may wish to protect any money you contribute to the deposit or home improvements that could boost the value of your home in case of a split. You could do this by getting a solicitor to draw up a legal agreement.

A property can be held as tenants in common in unequal shares with a declaration of trust that details who owns what and how it should be divided up.

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You may also want to consider keeping a separate current account, which your earnings are paid into and having separate savings accounts and investments, with an emergency fund in case you find yourself needing to live independently again.

It can also make sense to think about taking out life insurance that can pay off your mortgage should you die. Income or critical illness protection could also help cover a loss of income should you become unable to work.

Writing a will and keeping it up to date is also imperative to make sure your loved ones receive what you wish them to do in the event of your death.

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