Money Mondays is your go-to guide for all the information you need to manage your finances. For this week’s Money Can’t Buy Me Love column, a financial expert shares his top advice for married couples looking to manage their finances as a pair.
Here’s a depressing statistic: saving a deposit for a home in the exclusive Kensington postcode where Harry and Meghan will live would take the average newlyweds 133 years, according to research from online mortgage broker Trussle.
The royal couple will live in Nottingham Cottage, a two-bed home on the grounds of Kensington Palace, in London’s W8 postcode - where the average detached house costs a staggering £11.53million (in comparison, the average cost of a detached house elsewhere in the UK is £365,697). A couple earning the average UK salary of £44,297 would need to save a third of their take-home pay every year, for 133 years, to scrape together a deposit of 17% of the property’s value (£1.96million).
Of course, this isn’t the financial scenario that most newlyweds find themselves in. However, there are certain things that couples need to consider when managing their finances and saving as a pair, rather than individually.
Here, Ishaan Malhi, CEO and founder of Trussle, shares his four golden rules of money management for any newly married couple.
Set up a joint bank account
Most married couples share costs, and there can be a lot to share! A deposit, mortgage payments, property maintenance, and household bills are just a few of them. Setting up a joint bank account is an easy and convenient way to manage these costs without worrying about who owes what. There are even some banks that offer you benefits, such as discounts at local restaurants. Remember though that you’ll both be liable for any debts on the account, even if you weren’t the one overspending.
Unsure about whether to open a joint back account? Find further advice from Money Mondays here.
Take advantage of tax benefits
Tax and romance don’t tend to go hand in hand, but there are actually many financial benefits that money-savvy couples can take advantage of. If only one of you is an earner, you could look at the married couples’ allowance. There’s also an inheritance tax allowance when leaving money to your other half if you die. Plus, married couples don’t need to pay capital gains tax when they’re transferring assets between each other.
Once you’ve moved into a new home with your partner, make sure you’re properly insured. Home, life, and mortgage repayment insurance can protect you financially from any DIY disasters, burglary, or illness. When looking for insurance, shop around to get the best deal, and bear in mind the level of excess you might have to pay. With home insurance in particular, it’s vital you have the right level of protection so that everything’s covered, from the plasma TV to Grandma’s necklace. Not notifying your insurer of certain high-cost items could potentially invalidate your insurance, leaving you out of pocket if you need to make a claim. Adding on away-from-home cover also provides an extra layer of protection for the time you’re out and about or on holiday.
Stay on top of your mortgage
It’s easy to put your mortgage to one side once you’ve settled into a new home. But simply remembering the basics, such as when your initial term comes to an end, could save you a lot of money. There are currently two million UK home owners who’ve lapsed onto a higher-interest Standard Variable Rate mortgage because they didn’t switch deal in time. They could save an average of £4,500 a year by remortgaging. Signing up to a free mortgage monitoring service such as Trussle’s will continuously monitor the market and notify you as soon as you could switch to a more suitable deal.
Images: Taylor Hernandez, Micheile Henderson, William Iven, Unsplash, Samad Jble