How To Maintain Your Financial Autonomy In A Relationship 

Nearly a third of women would rather tell their partner they are sexually disappointed than confess to money worries within their relationship, concluded a 2015 survey by investment company Fidelity. Such is the potential for an almighty fallout over who ends up buying the next big shop that many people avoid the topic of money altogether.

As tempting as it is to bury our heads in the sand, confronting this subject with your partner is becoming more vital than ever, not least to maintain your financial autonomy in a relationship and even more so in the current economic climate.

The proportion of cohabiting couples is on the rise, according to the Office for National Statistics. Between 2008 and 2018, the number of cohabiting couple families increased by 25.8% to 3.4 million people, but the law has failed to catch up.

If you get divorced you can claim financial support from your ex-partner, and any assets either of you own in your own name, such as a property or savings, may be divided up. Similarly you will automatically inherit your spouse’s money and home if they die. Not so if you are cohabiting. So you have to set the rules yourself, and it can be a challenge.

For example, it is increasingly common for people to move into their partner’s existing flat, but however long you live there you are not entitled to any of the property unless your name is on the deeds, even if you have children together.

The only way to stake a claim is to become joint tenants, where you each own half of the property, or tenants in common, where you can choose to own different proportions, for example 30% and 70%, if one of you has put more money in.

Family lawyers report an increase in the number of clients facing financial difficulty because they realise this too late.

Jenna Lucas, a family law expert at Irwin Mitchell, says she recently had a client who had put her partner’s name on a property she was buying with a significant amount of her own cash. "Despite being the only person in the relationship with any assets and recently having left a job in the city to set up her own company, she was unable to secure a mortgage because she had, at that time, no regular income. Not thinking anything of it, she accepted her partner’s offer to take out a mortgage in his name for a short period until she could prove the income from her company and transfer the mortgage into her own name," she explains.

What happened next is enough to send shivers down anyone’s spine. "A year later," Jenna says, "the relationship breaks down and the partner claims 50% of the house on the basis that he is a joint owner."

Emily Deane, technical counsel at STEP, the family advice service, points out that even if you are just renting together unmarried, and you are not named in the rental agreement, you have no legal right to stay in the rental property.

"If you are both named in the rental agreement then you can both continue living in the property and you are both responsible for paying the rent," but that means you could end up being responsible for your partner’s rent, too, if they move out and stop paying.

And that’s not all. Pensions are an often ignored and overlooked area in which cohabiting with your partner can create problems.

Rayner Grice, partner at Clarke Willmott LLP, says that a divorce court will consider whether a married couple's pensions should be shared between them when they separate, but this does not apply to a cohabiting couple. This is more likely to leave women in financial difficulty, given the huge gap between men's and women's pension savings. 

So if you’re unmarried but living with your significant other, where to start to make sure you maintain financial independence while protecting yourself and your partner?

The first step is often deciding whether to get a joint account and how much to put into it.

While joint accounts are convenient for splitting household bills, be aware that you are liable for any debt that your fellow account holder runs up. That means if your partner keeps rinsing the overdraft and refuses to clear it, you are expected to do so.

Also note that taking out any joint financial product – be it a loan, overdraft or credit card – can have an impact on your credit rating. Some banks will look at your partner’s credit score as well as yours when deciding whether to lend to you. Your credit ratings are not linked just by living together, however, so any debt they have in their own name won’t impact you. 

If you want to protect a sum of money that you’re putting into a property, you could draw up a declaration of trust or cohabitation agreement – a bit like a prenup for unmarried couples – stating who owns what. This is occasionally used in court if things get messy but it is not to be relied on as a legally binding document. It can help structure a conversation about how you want to split things, though. 

If hiring a lawyer feels a bit much, you can draw up a living together agreement (download one online at advicenow.org.uk). This is a more informal written promise detailing what you each own and what you’ll contribute to the household finances.

Thirty-year-old Stephanie recently bought a property with her boyfriend after renting a place with him for five years. Her biggest piece of advice is to talk about money and try to avoid judgment. Oh, and draw up a will, even if it feels daunting.

Stephanie reflects that it wasn’t until she and her boyfriend started the process of buying their home that they began talking about money in a detailed way. "We knew we needed to scrape together every pound, penny and 10p coin under the sofa, so it became part of everyday chat much more. Sometimes it threatened to get sour, if either of us felt the other was spending irresponsibly or saving more than the other. We decided to have what turned out to be actually quite a fun evening, doing our respective budgets on spreadsheets together with some beers. I clearly had a ruinous Uber habit, and he was spending an eye-watering amount on lunch every day."

Because buying a home forces you to think about the future in a way you might not have done before, she says they have also now talked a lot about what would happen if they split up or one of them died. "We learned during the process that because we’re not married, there was a chance our parents could inherit our share of the property. Definitely make a will, we did it online with Farewill. It’s one of the most important admin jobs when buying a house together as a cohabiting couple, and not nearly as grim or time-consuming as you might think."

Jessica, a 31-year-old fitness instructor who is also currently training to be a counsellor, agrees on the value of keeping up conversations about your finances. "One discussion is not enough," she says, "it needs to be revisited to make sure you're still on the same page and things are working out how you planned. Your financial situation can change and you need to take that into account."

In July, Jessica moved in with her partner Emma, who was previously married and owned a house with her ex. Emma also has two children who live with them. The couple do not intend to get married, so they have had to work out how to make their newfound and more complicated financial situation work fairly.

"Together we have bought out Emma’s ex and now live in the same house but own it together," Jessica says. "When we decided we would go ahead and move in, we wrote a document where we listed our initial thoughts as to what would be fair, in terms of splitting payments for mortgage, bills and food as well as what items should come out of our own money. It was slightly more complicated than it might have been because of the children, we have chosen to do a 65-35% split on most bills and food. We also had a discussion as to how important we felt it was to rigidly follow the document and agreed that the most important thing was that neither of us felt hard done by and were able to communicate if that were the case."

They have also taken out life insurance to make sure the mortgage can be paid if one of them should die, and they have also both written wills.

"Ultimately, openness and honesty is more important than anything else when it comes to managing your finances within a relationship," believes Charlotte Ransom, chief executive of investment company Netwealth. "Clarifying what’s 'yours', 'mine' and 'ours' from the outset and over time can help to avoid confusion or complications later on. Open and regular conversations mean financial problems you might need to face together don’t come as a surprise."

Moving in with someone is exciting. It’s a new beginning and the last thing you want to be thinking about is the possibility that things might end but as the saying goes, failing to prepare is preparing to fail.