How to have tricky money conversation with friends and family - plus help available

Having tricky money conversations

I was recently chatting to a reader who had got in to a bit of trouble with his finances. Even though the debt was building up, he had hidden the scale of the problem from his family out of shame. But it was clear that the burden of trying to keep everything together was becoming overwhelming. Fortunately, he spoke up just in time.

Because there is help available with everything from your utilities bills to your mortgage – as long as you don’t leave things too late. There are great organisations like StepChange, the free debt charity that can help you if you can’t afford to pay your bills. Meanwhile if you are looking for simple financial tips and guidance, the government linked MoneyHelper website has loads of tips – and a helpline you can call too.

If you are in a long-term relationship, thinking about living together or are combining your finances, then a chat about your financial situation is essential. This might sound awful, particularly if you’ve struggled financially in the past. But it’s absolutely essential as you plan your future lives together. I’d start by giving your personality a financial audit. Are you cautious around credit and debt or are you more of a ‘spend and sort it out later’ person? How many debts do you have? Write down what you owe on credit cards, loans, overdrafts, finance deals and buy now, pay later credit.

Managing joint finances

Taking a look at your financial status can be the starting point for turning things around if they’ve got a bit out of control. Take some time to think about the financial commitments you might be making together. Do you want to take out a joint financial product like a mortgage? Or are you just talking about life goals or turning your finances around?

Most importantly, don’t try and do everything in one go. Have a chat in an informal setting and agree to discuss what stage in life you are at from a financial perspective and what your future plans are. If you are considering taking out significant joint financial arrangements, like mortgages, insurance or investments and pensions, then speak to a financial broker or specialist so you understand fully the benefits and potential problems.

The most common joint agreement is a bank account. With current or savings accounts you can set the rules around who can operate and change the agreement. You’ll be asked if you want the account to be set up so both people have to sign to release money or make changes to the agreement. More commonly, you can allow each person to operate the account individually instead.

Understanding liabilities and debt

‘Joint and several liability’ is a legal term that means when you enter into a joint contract with another person or people, you are responsible for the entire agreement if one or more of the other’s fails to meet their obligations. In simple terms, if your partner withdraws all of the money from your joint bank account overdraft and credit cards and vanishes, you are liable for paying off the debt if they can’t be tracked down.

There are three main credit reference agencies in the UK that hold details about your credit. They are Experian, Equifax and TransUnion. You can request your statutory credit report for free (avoid the subscription services). If there is anything on there that is incorrect or unfair, you can appeal.

It’s very common to go in to denial when it comes to debts in the hope that the problem goes away. Of course, this only makes things worse. But it’s not uncommon for people to be so terrified of their finances that they often don’t seek help until the situation has become dire.