Money and relationships: a crash course

This is an audio transcript of the Money Clinic podcast episode: ‘Money and relationships: a crash course’

Claer Barrett
Hi, it’s Claer here. What are you doing this Friday lunchtime? There’s still time to sign up to the FT’s free Personal Finance and Careers webinar on April 21st, with me and Isabel Berwick, the host of our Working It podcast. Sign up for your free place, visit ft.com/moneyevent or follow the link in today’s show notes.

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Davinia Tomlinson
You know, I cringe to think of, you know, some of the interviews that I’ve experienced in the past, you know, going into an interview situation and being asked, you know, were you engaged, when do you intend to get married, and then when do you intend to, you know, start a family? And of course, I shot those questions down in flames. But, you know, I know that my experience is not rare.

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Claer Barrett
Welcome to Money Clinic, the weekly podcast from the Financial Times about personal finance and investing. I’m Claer Barrett, the FT’s consumer editor.

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Coming up, what women need to know about money and relationships. I’ll be sharing a conversation I had as part of an event I did in partnership with FLIC, the FT’s financial literacy charity, where I was joined by three fantastic experts who spend their careers empowering women and girls with their finances. We’ll be discussing things like how to talk about money in a relationship, spotting the signs of financial abuse, managing money as a single person, and how to plan your finances before trying for a baby. First up, let’s hear from Davinia Tomlinson. She is the founder of rainchq, the financial advice service for women. Plus, she’s the author of Cash is Queen, a book aimed at encouraging teenage girls to make the most of their money.

Davinia Tomlinson
My background was in investment management, so I spent the best part of two decades working in the industry and loved it. But what I recognised is that there is this widening chasm between men and women when it comes to our propensity to manage our money, invest our money for the long term. And I couldn’t understand why. And I think coming from such a matriarchal background as I do, you know, in recognising that women very much held the purse strings within my household, I wanted to see that success replicated elsewhere. And that’s really where rainchq was born. And of course, that too, now extended into my book Cash is Queen, which is . . .

Claer Barrett
Yeah.

Davinia Tomlinson
. . .  all about helping the next generation of young women take control of their financial futures early as well.

Claer Barrett
Now, talk a little bit about Cash is Queen because it’s aimed at a really interesting cohort of women-to-be, I suppose I should say, 10- to 16-year-olds. Why did you pick them?

Davinia Tomlinson
You know, I felt that we were missing a trick in that we were waiting until people reached adulthood and we were already, you know, knee-deep in the mire of financial complexity, managing our finances, navigating some of these conversations in our households before we started to try and educate women about how they could optimise their financial wellbeing. And so what I wanted to do in Cash is Queen was to address the next generation, really targeting young ladies on the cusp of adulthood as they’re going through adolescence. We’ve got all of these other competing pressures, puberty, periods, getting our training bras, all of these things, you know, that can stress you out as a teenage girl. But what I wanted to do was to empower them and have them feel that money was something that they could achieve mastery in long before they reached adulthood.

Claer Barrett
Our second guest is Nichola Sharp-Jeffs, the founder and CEO of the charity Surviving Economic Abuse. You might recognise her from our previous Money Clinic episode about financial abuse.

Nichola Sharp-Jeffs
My background is in the women’s sector, so working in the violence against women and girls, domestic abuse space. And I think what really struck me as I spoke to them was the economic impacts that the abuse had had on them. So that included economic control as part of the abuse that they’ve experienced, but also how that led them to be in a position where they really struggled to move forward and to be independent. And I think, you know, this could happen to anyone of us. And I remember seeing reflected back to me, my own self. And it just made me really passionate because I felt that the potential of some of the women that I had spoken to had been curtailed, they weren’t living the life that they should have been living. And as I say, it made me really passionate to raise awareness of this particular form of abuse. And I established Surviving Economic Abuse back in 2017. And I think the success of the charity is just a reflection of how much it’s needed.

Claer Barrett
And our third expert today is Tobi Asare, the founder of the blogging community My Bump Pay, which she set up to help women navigate the financial challenges of maternity leave.

Tobi Asare
So My Bump Pay is a platform designed to help women smash the glass ceiling of the baby on the way and beyond. And I started it, having been the very first person in my organisation in that particular office location to go on maternity leave. I was incredibly ambitious and I had lots of questions about how I was going to make it work and stay on that success trajectory that I was on. Among having all these questions, I talked to my friends about it, different people along the journey, and I find that I wasn’t alone and actually I just had a spark one day to think, what if I put all of this information that is actually already out there but put it all in one place, in a way that’s really engaging, in a way that people can grapple with it, but also in a way that gives people the confidence to make the right decisions with all the information at their fingertips. So it’s been an incredible journey, started off as a blog, then kind of transferred over to Instagram and is now in the form of a book called The Blend, which is available to purchase now.

Claer Barrett
So of all four things that we said that we think every woman should know about money, I think one of the most important ones is how you manage money with your partner. A couple of the questions that we’re getting coming in, some people are questioning whether there’s a difference between the way that women and men manage their money. Other people are saying that because of the earnings differential between them in a couple, should people be contributing differently into the joint account, if you have a joint account? Very few people seem to have one nowadays. Maybe it shouldn’t be 50-50, particularly if it’s after you’ve gone back to work after having children. You’ve cut your hours down, your earnings power has been gone. But how could you bring up this in conversation? Any tips for people who are watching, thinking, “Yes, actually, I’ve never thought about that.” Because it’s the lack of disposable income, I think, that prevents women from investing more, from saving more. That is the biggest barrier. It’s not that we don’t know about investing, that we don’t realise how important it is. It’s just literally having the cash.

Davinia Tomlinson
I think from my perspective and speaking as somebody that is divorced, and so coming at the end of a relationship, and learning some of the lessons and it’s one of the things I’m always quite keen to share with the Rainmaker community, because I think a lack of transparency is again, one of the things, one of the impediments to women being able to assert economic independence and empowerment and really self-advocate. And so I think it’s really important that you start your relationship on the basis of full transparency. And that might look like saying, right, you know, I think we should have a money date. It doesn’t have to be in the household, but, you know, trying to sexy up a bit and not making such a (chuckles), you know, perfunctory thing.

Claer Barrett
Yeah.

Davinia Tomlinson
You know, do it outside the household if you think that it potentially might get contentious, try to unpick some of the reasons why. So just trying to, you know, start from a position of empathy and compassion. You’re in love with one another, so that’s a good place to begin. But I think just taking the time to recognise that having that openness is ultimately what will mean everybody gets to benefit, so nobody should feel that they are disadvantaged by those conversations.

Claer Barrett
Well, I couldn’t agree more. (chuckles) But I mean, Nicola, obviously there is a dark side to this. Now some, you know, financial concealment, you could call it, or one person being more of the master of money in relationship than the other. I mean, I am that person in my relationship. It can often come from a place of love. It can often come from a place of the other person, whether male or female, not really wanting to be that involved. Because, I mean, if I was paid by the hour through the financial admin I did for my family, I wouldn’t need to work for the FT. (chuckles) But obviously the darker side is that it can be used for negative reasons.

Nichola Sharp-Jeffs
Absolutely. So I think this point about being secretive about finances might be a warning sign, a partner not wanting to have that discussion, finding excuses not to have it, always amazed by the number of victims and survivors I speak to who didn’t know how much their partner owned, for example, they didn’t know whether their name was on the mortgage for the house. So really important to be having those conversations really early on. And I guess what I would say around, you know, we all have arguments. Of course, we don’t always agree. But the kind of a line for me in terms of what’s an argument and what becomes abusive and a form of control is whether or not, you know, you’re confident and you feel safe to have those conversations. So are you in a relationship where you can speak about these issues, where you’re not concerned that by raising them, there might be some kind of punishment or retribution, for example, for doing so?

Claer Barrett
Well, that’s where we made it. The second thing that we want women to know on this webinar: know how to spot the signs. So my big, kind of, call to action was that we need to start speaking about money in relationships earlier on to sort of make it a bit more normal and also test the waters.

Nichola Sharp-Jeffs
Absolutely. There’s so many different ways in which you can introduce that conversation. You know, I think, you know, to your point that as a society, we definitely don’t talk about finances. We also don’t talk about abuse like, honestly, it’s a double taboo. So with financial abuse, we’re kind of bringing together two things that we just don’t talk about as a society. So really important, you know. And I would say, you know, from sort of earlier on when I speak to victims and survivors who say actually looking back, there were some real signs, you know, I was always picking up the, you know, the bill for when we went out for dinner in a restaurant or, you know, actually beginning like really caring behaviour. So, you know, “You’re so busy, why don’t I take care of the finances so that you have time to spend with the children” or again, you know, “You don’t need to go back to work.” You know, “You can spend time with the children. You don’t have to worry about that. I earn enough for the both of us.” And what we’ve learned through speaking to victims and survivors is that, you know, just little by little and they don’t really notice it necessarily, but they suddenly realise that they’re losing that independence. You know, really similar thing around joint bank accounts, which actually is a bit the tell-tale sign again in relation to domestic abuse as a partner, insisting on setting up a joint bank account, saying, you know, “If you really cared about me in this relationship, if you were in a partnership with me, you wouldn’t need your own bank account.” You know, so this importance of, you know, kind of hanging on to your financial independence, so that if you do kind of, you know, get to the point where you’re sort of blind on the joint finances, we know that women who don’t have access to £100 in short notice, are three and a half times more likely to experience abuse because the perpetrator recognises that they’ve got no way out.

Claer Barrett
Gosh, that’s a really, really damning statistic. Tobi, Davinia, do you want to come in on this topic? Tobi, I think you’ve written about this actually in your book?

Tobi Asare
Well, I think money in general is really important to talk about and we talk about talking about money and how we actually don’t talk about money. And there’s lots of studies that show that if women don’t talk about money, therefore they’re less confident in negotiating for money and salaries. And that’s lots of stuff that we cover in the book. And it’s really important at every stage of your career, not just as you enter into parenthood. But there’s a study that shows that if women don’t do that over their lifetime, they could lose between £1mn and £1.5mn left on the table over their lifetime.

Claer Barrett
Being an FT journalist, (laughter) we will interrogate that £1 million figure slightly. So this is things like not asking for a pay rise and you don’t get that money. Not moving jobs, maybe because you work part-time. That’s something that I see again and again with my own friends that go part-time. They find it harder to job hop and it’s the job hop that increases the earnings power more significantly than kind of natural promotion within the same organisation. What else? Not being able to afford to pay into the pension, missing the . . .

Tobi Asare
Yes, that’s a huge one. I think that’s where that you probably see the largest chasm is if you are taking maybe a particular type of employment because you may be forced to. Maybe because of childcare or because of the way that your life is just set up and therefore you’re contributing less into your pension pot, especially if you’re not claiming child benefit and therefore you’re kind of missing out on those credits . . .

Claer Barrett
And the state pension, yeah.

Tobi Asare
. . . enough. So there are various different ways that we could miss out. But I also just think just negotiating, just having the confidence and the willingness to ask, “OK, is that it?” Or “But why?” Or doing your research around a particular sphere, so be it a career and making sure that you know that you’re being paid to market rate and your market value. And I also think maternity leave or coming back into work is a really interesting and important inflection point. Make sure that you are included in any kind of salary reviews if you are on maternity leave. Those are all points at which we should be talking about money that sometimes as women we shy away from.

Claer Barrett
Mmm. Use your contact days wisely. Now, I’m going to throw to a question here. Just because, Nicola, we’ve had a question from somebody watching. It’s slightly upsetting to read it. She says, “My husband has asked for every single savings account login that I have. The login name and the password. But I don’t know about any of his investments. My question is: is this financial abuse?” Well, based on what you just said, it certainly doesn’t sound like a healthy balance within a relationship.

Nichola Sharp-Jeffs
It certainly doesn’t sound like a balance, does it, if that’s not reciprocated in terms of the behaviour. And one of the things we see around that kind of blindness that can happen is the login details, you know, could be taken and in this instance changed. So she then can’t get back into her own savings accounts, which would be really worrying. So I think, you know, in this situation, it could be a sign of abuse. And I would, in this situation, perhaps suggest that she should tell her bank about this, who, you know, can perhaps support her and find a way of managing this situation alongside a support line or service. And certainly, if you go on to the Surviving Economic Abuse website, there’ll be some information there about how she could find out more. But yeah, I would absolutely, you know, suggest that she take some advice and get some support around this and perhaps talk to friends and family and bring them in a little bit.

Claer Barrett
Yes, definitely talk to friends and family. And thank you for putting it out there, for being brave to ask the question. I’m going to move on to our next topic now, which is about how you can deal with the single tax. Now, when I first said I wanted to make this one of the four topics that we talked about, a couple of people said, “Well, what is the single tax?” And I have to say that somebody who was single for most of their twenties, it’s just so much harder to do anything financially if there’s one of you. Quantitative easing, the soaring house prices that we’ve seen over the last 15 years since I managed to buy a flat as a single person, you know, I’d struggle to buy the same flat now, even on a higher wage, if I was completely on my own. And this is something that does have a bearing on our romantic relationships. Tobi, I’ll bring you into this because of course being a single parent adds an extra dimension to the single tax, doesn’t it?

Tobi Asare
Yeah, it absolutely does. Especially if you have small children who are of the age where they’re potentially could be going to nursery versus going to school. That cost can be as astronomical as it is for individuals that are in a relationship, but let alone being somebody who’s not in relationship or happens to be a single parent. And to those people out there, I would say it’s finding your tribe and finding your village. And if you’re very fortunate to have parents and grandparents nearby, lean on them if you can as much as possible. But also friends can help people at the school gates, you know, build community where you are, as much as you possibly can. But also maybe even speak to your employer and see what they offer. They may offer some contribution towards childcare, whether it’s some kind of salary sacrifice scheme. And if they don’t, (chuckles) try and have a conversation about that, because that will enable you to have more focus on your work and kind of lean into your career. So hopefully that might help you in the long run in terms of your earnings trajectory to try and help hopefully offset the challenges of being a single parent.

Claer Barrett
OK. So we’re going to cover a fourth and final area now, before we move on to viewers’ questions, which is the money things that you need to know and have talked about to your partner before you even think about trying for a baby? (chuckles) Tobi, you want to kick us off on this one?

Tobi Asare
I think the two critical things before you think about starting a family are understanding what your career journeys might look like, and that’s for you as an individual and that’s for the other partner. And really having a really honest and frank discussion about what are the some of the things that you want to achieve. Now, this book is saying that you can absolutely achieve those things along the way whilst growing your family, but you do have to be incredibly strategic. So having that conversation, being really open about how do we want to potentially do this, theoretically, how do you want to navigate childcare? So that’s one thing. And then the second thing I would say, I say a lot. I preach about it a lot, but have a look at both maternity and paternity policy.

Claer Barrett
Mmm.

Tobi Asare
Parental leave policy, it is an absolute must. I really encourage people to . . . both parties in the relationship to have a look at their policies and see what they’re eligible for before they start into the wonderful baby-making stage. (laughter)

Claer Barrett
Well, I say it’s . . . (laughter) I say . . . OK. (laughter)

Claer Barrett
I see. That, to say . . . you don’t need any of our advice. You know, carry on then as you were with that. Well, I think two brilliant questions that you could ask in any job interview that you go to and this applies to men as well as women, frankly, are what is the paternal leave policy? And the second one is what’s the company pension scheme? Because again, these things, a company’s a company, one might be very generous and other company might be not generous at all. Now . . .

Nichola Sharp-Jeffs
May I just say something, Claer?

Claer Barrett
Yes, please do.

Nichola Sharp-Jeffs
Just I think there’s a role for your employer here as well.

Claer Barrett
Yes.

Nichola Sharp-Jeffs
What we found with economic abuse is that it kind of follow life stages. And actually, if you’re pregnant, you’re more risk of abuse because of that financial dependency. So we’d actually also encourage employers to be having conversations. You know, if one of their employees is going off on to maternity leave, to actually say things like, you know, have you talked about how you’re going to manage, you know, are you going to be coming back to work, those kind of conversations? Because again, it provides the space not only to have those conversations and to start normalising them, but, you know, perhaps potentially to disclose or to discuss any worries.

Claer Barrett
One of your ideas from your blog, my stepdaughter recently had twins. When she first found out she was pregnant, I sent her (chuckles) these articles from your website and I said right there, when you tell your boss that you’re expecting, say that you want a projection of your maternity pay, what you’re going to get month by month, because it is a shock to many people when they find out that there’s probably going to be three months or maybe even longer where they’re going to get absolutely nothing. And this is when their personal finances are the absolute kind of nadir, because they’re about to have to pay for childcare, nursery deposits, all the rest of it. You need to be able to budget if you’re going to have these big changes and that, Nicola, I think something that companies could really do. Budgeting when you’re on maternity leave, it’s crucial, isn’t it?

Nichola Sharp-Jeffs
Yeah, absolutely coming in and I love what you just said there. And actually in the book we have a diagram that literally shows it in visual representation. Two months, you know, one to nine almost there’s some money and then months nine onwards there is zero coming in.

Claer Barrett
Davinia, is there anything that you want to add on this topic?

Davinia Tomlinson
Yeah. I mean, as you know, the ladies have been talking, one of the things that strikes me is that it really is a team effort. You know, for those women that are not having, you know, children by themselves, by choice or otherwise, if you’re in a relationship in which you are choosing to start a family, it shouldn’t be the burden of the woman alone to be thinking about some of the economic and financial consequences of starting a family. You know, I cringe to think of, you know, some of the interviews that I’ve experienced in the past, you know, shortly after I got engaged, going into an interview situation and being asked, you know, were you engaged, when do you intend to get married? And then when do you intend to, you know, start a family? And I, of course, I shot those questions down in flames. But, you know, I know that my experience is not a rare experience, and I’m sure Tobi can attest to this. But also, I think, you know, so, of course, employees do have a responsibility to make sure that they’re asking appropriate questions during internal conversations. But I think the other thing that I would add is that there is a conversation to be had, you know, specifically to your question about what should we be thinking about before we start trying even? Understanding from your partner. What is their attitude towards that financial dependency? Are they happy to be the primary, you know, to take the lead on finances in the relationship at a point where, as you say, you’re at the nadir from your own financial perspective? Are they happy to shoulder responsibility for part of the childcare? To what extent, what proportion of that childcare are they happy to contribute towards? Because I think this is one of the things when you’ve got your love goggles on, (laughter) deep in the throes of the relationship, you’ve got hearts in your eyes. You’re not asking your partner, you know, “Well, who’s going to do the pick-up and drop-off? You know, who you know in the school holidays, are you happy to use some of your holiday?” And so having those kinds of conversations, I think, is also key to that.

Claer Barrett
OK, fantastic. Well, I’m going to devote the rest of the session to your questions. “How do we prevent wealth inequality in a couple when one person bears the brunt of the childcare and therefore long-term loss of earnings?”, asks one viewer. Tobi, do you want to come on this first? How can we structure the talk?

Tobi Asare
Yeah, I think, don’t have that talk just before you go to bed. (laughter) I think timing is so important and I think structuring the talk as a family vision. So there’s different ways that you might want to approach it, but it could be having a family vision board party, for example.

Claer Barrett
A family vision board party.

Tobi Asare
Yeah and, you know, laying out or cutting pictures or getting pictures online of what you want your family set-up to look like, and therefore then having a conversation about what it’s going to take to achieve that. And who needs to play which role at which time to achieve that. So I think those are different ways to kind of have the conversation. It can be incredibly daunting, but I think looking at it as a kind of complete family goal does sometimes help.

Claer Barrett
Any other advice for the imbalance? Got a couple of people talking about the ratio, saying with the cost of living crisis, is it fair to ask your partner to contribute more to household bills? And how would you approach that conversation? We know of . . . I’ll personally share, I earn more than my husband and we have a ratio method and I pay two-thirds and he pays one-third, because I think that’s fair. I don’t want to diminish his savings, not that he saves as much as he should, (chuckles) but you know, it’s his money, I can’t force him to. Starting a conversation and saying that though, is difficult, Davinia and Nicola.

Davinia Tomlinson
Mmm. I mean, I, thinking very practically, really like the ratio method. Purely because I think there’s an . . . it’s objective and I think conversations around money as much as you know, it is numerical, it’s very emotionally charged. And I think it’s much easier to present a case for why it should be done on the basis of ratio rather than us going to what has been viewed as the automatic balance, which is 50-50, which could ultimately lead the lower-earning partner financially worse off when we look at disposable income. So I think trying to achieve that gender parity in your relationship is a good model actually for them when you go out into the workplace.

Claer Barrett
Well, and if you want the conversation opener on your money date with your partner, you can say, “Well, I was listening to a Financial Times webinar which the ratio method was mentioned. It’s not a sexual position. That’s the dealing with our bills.” A final question about the risks of cohabiting without being married, particularly if you own a property. Another similar one, somebody who owns the property and their partner is about to move in asking how it will affect them. I mean, on the subject of things like life insurance and also inheritance tax, they’re the two biggies really, that you need to be thinking about as a couple if you don’t have a civil partnership or a marriage, if you are cohabiting, there’s no such thing as common law. But I mean, Davinia,  a lot of women just don’t they realise this? Or men don’t realise this?

Davinia Tomlinson
Yeah. Absolutely. And I think this is the juncture. This is one of the questions that I get again quite frequently from a range of customers. And this is the point at which I think it pays to get qualified and regulated financial advice. So this is not go on social media and taking advice from who seems the most popular in the personal finance sphere, but instead speaking to somebody that is trained to give you proper information and advice about what best to do. So for example, with regards to your property, it might be making sure you’ve got an appropriate deed of trust in place so that it’s quite clear who’s contributed what. And you’re not having that wrangle in the event that the relationship should ultimately dissolve. And of course, you’ve got the emotional consequences to deal with there. You don’t also want to have to deal with the financial implications of that, too. But I think just being, you know, knowing your way around the different relationship statuses and the benefits and the consequences of each one, because as you rightly say, I think lots of us, because we live in such a far more liberal society than perhaps our grandmothers’ generations. And so on that basis, there are far fewer of us who are choosing to get married and not necessarily understanding that in cohabiting laws of succession, for example, are quite different than they might otherwise be.

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Claer Barrett
That’s it for Money Clinic, with me Claer Barrett, this week and we hope you like what you’ve heard. If you did, spread the word, leave us a review. We’re always looking to chat with people about their money issues for the show. So if you’re interested in being part of a future episode and are looking for some expert money advice, then email us money@ft.com. You could also take a peek at our website ft.com/money, grab a copy of the FT Weekend newspaper or follow me on Instagram. I’m @ClaerB.

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Money Clinic was produced in London by Persis Love. Our sound engineer is Breen Turner and our editor is Manuela Saragosa. You heard original tunes this week by Metaphor Music. And finally, our usual disclaimer: the Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. For that you’ll need to find an independent financial adviser. That’s all the small print for now. See you back here next week. Goodbye.