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Finances and fiances

You may not have noticed, but we are currently part way through National Marriage Week, which incorporates St Valentine’s Day tomorrow.

But if you thought that romance and finance didn’t (or shouldn’t) mix, you’d be wrong. Or at least that’s according to the numerous investment firms who are using Marriage Week to promote the view that it is vitally important couples think about – and, in particular, talk about – money.

There can be a number of financial advantages to being married or in a civil partnership. But research shows that many people, both before and after marriage, are reluctant to talk about cash, and this has the potential to cause problems.

Fund manager BlackRock says that around one in eight people in relationships don’t involve their other half in financial planning, largely due to fear of the arguments it could create.

Among older generations, pension provision has tended to be quite lop-sided within couples, with men generally earning and saving more, spending longer in company pension schemes, or accruing more state pension entitlement.

This discrepancy is being addressed to some extent. Recent figures from Scottish Widows show that 50% of women are now preparing “adequately” for retirement compared with 55% of men. Five years ago, the gap was more than twice as big.

But it remains important for couples to look at their pension prospects as a whole and act quickly to address any shortfall. BlackRock says that, at the moment, only 44% of us work with our spouses on financial planning.

Combining finances can have other benefits, not least when it comes to saving.

The current annual tax-free Isa (individual savings accounts) limit of £15,000 applies per person. If the amount you plan to save this year takes you over this limit, you could use your husband/wife/civil partner’s allowance to help avoid unnecessary capital gains or income tax.

The same applies to non-Isa savings. If you’re being taxed at 40% but your spouse pays only 20%, for example, it would be well worth (and perfectly legal) to deposit some of your spare cash under their name.

Joint finances aren’t just a good idea for saving and investing. Many of us withhold the truth about debt levels, which has the potential to lead to significant issues further down the road.

Figures from insurer Standard Life suggest that around one in six men and one in seven women hide the real extent of their indebtedness.

As well as the obvious implications for household budgets, having a partner who borrows more than you think or who has had debt problems in the past could hamper your own efforts to get credit such as a loan, credit card or even a mortgage.

Standard Life’s Julie Hutchison says, “if you feel the need to tell lies about the state of your finances, this probably indicates they aren’t completely shipshape. The one person you really should be honest with about money issues is your partner: it’s hard for any couple to build a future together based on financial fibs.”