Till debt do us part

It's the season to get married but are you and your spouse-to-be cash compatible? Moneyextra looks at the key financial issues you should discuss with your partner before tying the knot.

One of you earns more than the other

If there's a substantial difference in wealth between you and your soon-to-be spouse, you may want to think about a pre-nuptial agreement. Julie Clapperton, an adviser at Edinburgh-based Financial Direction for Women, says: "This may seem quite harsh, but if you ask couples who are currently separating, they didn't think they would ever divorce when they got married."

She says an agreement may help to eliminate any concerns that your partner is only with you for your money, and it means that you both know where you stand should your relationship ever come to an end. Jasmine Birtles, founder of finance and lifestyle website Moneymagpie.com says a pre-nuptial agreement is a good idea, although it is not legally binding. "In fact, there have been hints from the Government that such agreements should be taken more notice of - not least because of the potential cut in the Legal Aid bill. That would make them more in line with the rest of Europe, where pre-nups have been widely recognised for some years."

Right now Birtles says an agreement could prove persuasive to a court when a divorcing couple is arguing about who promised what to whom. "But it's usually only when the marriage has been comparatively short and there are no children involved," she adds. The only problem is that an agreement does challenge the idea of living happily ever after which can be stressful for everyone involved. Pre-nups are a good idea if youre about to enter a second marriage (they have an even higher divorce rate than first marriages) and want to safeguard inherited family money, your business, or your children from a previous relationship.

Different attitudes to money

"Money is regularly a cause of arguments between couples, and in order to reduce the frequency of these arguments it's a good idea to review your finances before you get married," says Clapperton. Both Clapperton and Birtles recommend couples keep individual bank accounts, as well as having a joint account to pay all the household bills.

However before you do so, you'll need to agree how much should go in the account. Clappertons says: "While it may seem a good idea to put the same amount of money in each per month, this isn't going to be fair if one partner earns £1,500 and the other earns £800. Instead consider allocating a percentage of your earnings." The joint account can be used to pay essentials, such as the mortgage and bills, while the money remaining in your own account will give you the freedom to spend/save as you wish.

Clapperton adds: "This can help reduce general arguments about money - your spouse isn't able to complain if you buy those Jimmy Choo shoes, and you can't complain if they buy the latest iPod, after all it's their money they are spending."

20 April 2007 © Moneyextra.com

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