Financial Planning for Singles vs Couples

Financial planning looks quite different whether you are managing money as a single person or as a couple. From income and living costs to insurance needs, investments, and retirement.

Relationship status impacts many aspects when crafting an effective financial strategy. In this article, we’ll break down the key differences and considerations for singles and couples for major planning areas in the UK.

 

Managing Day-to-Day Finances

Handling regular income and expenses often requires different approaches:

Housing Costs

• Couples can share housing expenses.
• Singles enjoy lower utilities and other cost reductions.

Saving and Investing

• Couples can leverage two income surpluses to save and invest, but their savings target tends to be higher.
• It may be more challenging for single people to build capital, so a disciplined savings plan is essential.

Credit

• Joint accounts can help couples build credit history and scores.
• Singles must rely on their own credit score, but it cannot be influenced by someone else.

Taxes

• Married couples can own assets jointly, giving the opportunity to apply two sets of allowances to that income source such as a buy-to-let.
• Singles do not have this advantage.

Financial Management

• Couples should communicate regularly and be transparent on finances.
• Singles have sole responsibility for their finances, which can be simpler to manage.

 

Insurance Protection Differences

Insurance needs also change based on marital status:

Health Insurance

• Couples may qualify for partner health coverage from one spouse’s work plan.
• Single people do not have this option.

Life Insurance

• Couples often need coverage to provide for one another in case of death.
• Singles tend to require minimal cover.

Home/Auto Insurance

• Couples can bundle multi-policy discounts on home or auto insurance.
• Singles often pay higher average premiums, so shopping around is key.

Income Protection

• Partners can factor in an element of support from each other.
• Single people are likely to value this type of cover more highly.

 

Retirement Planning Differences

Preparing for retirement also follows different paths:

Retirement Planning

• Couples can leverage two incomes to save for retirement. But require more to retire and have to consider two separate retirement dates.
• Singles must self-fund retirement but tend to have a lower target to achieve.

Pension Options

• Couples benefit from widow’s pensions and can benefit from two sets of retirement incomes.
• Singles must be self-reliant in that they must deal with all potential risks themselves.

State Pension

• Two full state pensions can provide almost £2,000 a month – a very helpful start for the household’s retirement cashflow.
• Singles must rely solely on their own state pension entitlement.

Inheritance Planning

• Couples can consider the liability being upon the second to die, giving greater flexibility in their succession planning.
• Singles must plan their own estates without the benefit of doubling allowances or exemptions.

Investing

• Couples can build wealth with combined resources and dual tax incentives.
• Singles may have lower surplus income but likely have a lower target to reach.

Using Debt Strategically

• Couples can optimise financing like mortgages, lines of credit and low-rate lending to build assets.
• Singles must be conservative with debt leverage given their reliance on one income source.

Starting Businesses

• Couples can fund new businesses by tapping combined savings or having one spouse with a steady job.
• Singles should bootstrap, crowdfund or take on partners, when possible, to share startup risk.

 

Key Takeaways

Financial planning fundamentals like setting goals, budgeting, and saving apply equally to singles and couples.

However, relationship status drives major strategy differences for issues like retirement planning, insurance protection, home ownership and investing given availability of combined incomes and expenses.

Understanding these nuances allows the crafting of better financial plans tailored to individual circumstances. Whether flying solo or paired, it makes sense to implement financial steps suited to your situation.

At Fiducia, our multi award-winning team of Chartered Financial Advisers can help you reach your goals in a timely – tax efficient – fashion. To have a free initial discussion with a member of our team, contact us below.