How important is 'financial compatibility' between partners?

[cool4cats2020]

Specifically, in 2nd time around relationships. I don't mean simply wealth, more attitudes to money, saving, aspirations and long term plans.

For context - me and DP (of 5 years) are both mid 40's, both with pre teen kids from our previous relationships. We don't live together, and no intention to, at least not until kids have grown up (about 10 years). We both work, and are on relatively low, but similar incomes. So we're currently fairly well aligned, but long term I worry we might be on divergent paths.

TLDR:

I'm a homeowner - managed to get on the property ladder in my late 30's, and I'm striving to overpay my mortgage. It's full term would take me to 70 to repay, but I'm throwing everything at it and current projection is that it'll be paid off by about age 55. DP has lived in social housing (nothing wrong with that at all) all their adult life, and so considers rent over £350pcm to be expensive (open market rents are currently about £1000pcm for a similar house round here). DP hopes to buy under right to buy scheme (but would only qualify if the proposed rule changes happen) 'in about 5 years or so'. DP will be 50 by then, and I've pointed out that most lenders only go up to age 70, so possible mortgage terms will already be shortening.

I've managed to build up a decent amount of savings over the last few years, which I'm hoping to put towards a house extension, or moving somewhere larger. DP has no savings, always lived month to month (I've lent money to help clear some debts, which has always been repaid on time), and tends to buy lots of stuff on finance (inc. fairly expensive car and non essential luxuries - e.g. fancy hot tub). By contrast I've always tried to avoid finance and simply gone without until I've saved up. I struggle to imagine DP being able to save for a house deposit while young enough to qualify for a mortgage.

I'm self employed (and was late starting pension savings), so I'm also making quite large monthly contributions to that to try and catch up (and to have enough to not have to work until I'm 70). DP has no pension provision over state pension, except for the nominal workplace pension scheme.

Less relevant, but still a consideration is that my parents have also worked hard and been quite prudent with money their whole lives, now they're retired and financially rather comfortable. I've got siblings to share it with, but at some point in the distant future there is likely to be some inheritance coming my way (hoping I'm 70+ and it'll go straight to kids/grand kids). DP's parents have no assets so nothing to hand down.

So my long term aim is to be debt free and able to start winding down work around mid 50's. Would like to go travelling, and maybe live on a narrowboat for a few years (whilst renting out my house). Obviously I'd like to be able to do these things along with DP, just can't imagine DP doing anything other than treading water financially until state pension age.

I'd happily let DP move in with me once all our kids have flown, but DP is fiercely independent and I can't imagine them ever wanting to give up their social housing. I've mentioned some of my longer term ambitions to DP but get the impression they aren't thinking anything beyond keeping our living arrangements and finances separate. I do wonder if we're going to end up 15 years apart in retirement terms, and if the relationship could survive that.

To me, financial compatibility - and the ability to talk constructively about financial goals - was an important part of an adult relationship. You seem to struggle to imagine your DP doing lots of responsible things, like saving a deposit or moving in together so unless you're happy to be in a partnership with completely separate lives (and that's not a condemnation, my MIL did exactly that which suited her and her DP well, protected her assets and eventually her estate) then I would question whether or not it was a partnership worth continuing.

It depends what you want long term. I wouldn't be living with him or subsidising him since you're in a good financial position, but it doesn't sound like he wants that anyway. So if you just like his company and are happy to live apart then fine. If you want to live with someone with a similar approach to finances as you then this isn't your guy.

Yes, I think that financial compatibility is extremely important and it is something people do not talk enough about. I find so many of my friends, including me, marrying people without ever discussing anything money related, when you finally do, it is too late. I would say that this person is completely opposite from you and is not a good fit long term.

It’s massively important if you plan to tie yourselves together in any way (including moving in together).

If I knew what I know now I wouldn’t have married stbx wasted loads of money on seeds smokes music career crap.

In my current relationship of 7 years, not very. We don't share much, don't live together etc. But are expecting in January and not sure how it'll work in regards to finances. Even if we did live together I'd still prefer to keep it seperate.

I don't know- I think it's essential if you are building a family together but if you only consider moving in when kids are grown and mortgage paid (yours) less so.

The main question is whether it will annoy you (as opposed to whether you would be able to afford house kids etc which is at stake when younger)

Honestly I don’t think your DP will be buying that house. Even if the rules do change to allow it, he would need to save up the deposit, and be able to pay the mortgage. Presuming the rules changes in five years, so he was 50 ish, he would almost certainly be paying a larger mortgage than his current rent, and needing to do so until he is 70. If you both accept that, in a way it’s ok, as when you are mortgage free and looking to enjoy life, he won’t have much in the way of a financial commitment. He could potentially let one or both of his children stay there and cover costs whilst you both go off on narrowboat adventures, and that would also enable his children to save money compared to commercial rents. The main issue is that when you are mortgage free, maybe making money from renting your house out, receiving your inheritance etc., he may get jealous of your perceived financial freedom, whilst he still has to work. Then when you retire, which could be early depending on your private pension, there’s the same issue. Ditto when you are both retired and he is eking out a state pension and yours is supplemented by your private pension. Also when your children are able to consider an inheritance, or you can look to free up equity to help them, and he can’t do the same for his children. He needs to be able to accept that these differences are down to the different choices you have both freely made. He gets the benefit now of a higher disposable income than you, possibly a lot higher, and never having to pay for house repairs himself. Even things like a new kitchen and bathroom will be covered by his housing provider’s cyclical maintenance scheme. If you can both be happy with these differences and the differing benefits you will each have, then it should be fine. But you need to talk about it honestly. And he if he really does intend to buy that house, he needs to stop spending and start saving PDQ.

In the event that you did move in together, I would strongly suggest that you have a joint account where he puts in the equivalent of his rent each month, in addition to splitting bills equally, to cover any repairs etc. to the house. Otherwise you will end up paying for it all and feeling resentful. If he doesn’t want to pay towards an asset that won’t be left to his children, that’s another issue. As it is though why would he leave that house? When he reaches state retirement age his rent will be paid by housing benefit!

PS I speak as the child of parents who lived in social housing whilst I was growing up, and still do now. They are still always amazed by what home maintenance issues cost, even ‘just’ a simple call out from a plumber! Trying to get them to understand the things I am responsible for as a homeowner, and how much it costs, is interesting…

More important for women than men in ny experience.

I think it's massively important. I think I would also come to find his lack of ambition irritating. I also think there's the risk you could end up subsidising him in future. That would not necessarily be a problem for you. But it'd bother me.

What rule changes to right to buy?!

Gosh just seen it. I totally missed that and I work in this sector.

www.gov.uk/government/news/right-to-buy-extension-to-make-home-ownership-possible-for-millions-more-people

@cool4cats2020 - it's a really important thing to be thinking about and there's already some good advice up thread. In your case you seem to have worked hard to leverage yourself into a reasonable financial position and are now working towards being able to enjoy things you like in later life.

I'm afraid DP won't be buying that house and track record you've laid out suggests to me he is going to be a financial drag on you.

In the end it depends what you think will make you happiest - if he really is the one you want then you have to live with the downside but everything in your post suggests to me you are worried about having to compromise your planned later life.

I'd want to know exactly where his money is going if he has a low rent and earns similar to you??

I don’t know if the financial side is as important but obviously helps. But you need to want the same things in life. You sound super organised and he may be more of a plodder. Has he ambition for other things? Maybe ask him his 5 year plan and see if he reacts? Maybe he needs organising or may just be happy the way he is.

I'm impressed that on a low income you're able to overpay your mortgage enough to reduce the term by 15 years, make significant savings (enough to fund an extension) and make massive pension contributions all at the same time as raising you dc solo. Looking to retire early and go travelling on your pension....

Are you sure you're on a low income?

If his income is the same as yours and he only pays £350 rent what does he do with the rest? Does he blow the equivalent or your mortgage + savings + pension contributions every month?

The older I get the more important I think it is. I'm in a similar position to you and there is absolutely no way I would share that with someone who had made very stupid decisions again and again and again.

Very important. I earn well but live frugally and well within my means. I couldn't be with someone who was constantly splashing the cash and had no interest in saving up. I couldn't be with someone who lived pay cheque to pay cheque. Absolutely nothing wrong with any of that, I just wouldn't want that in a partner.

However, it's also extremely important that you can discuss these things together.

@User110922 - i'm like this too. I own my place and my fixed outgoings are a small proportion of my take home pay. I don't mind what a partner earns (she needs to be intelligent and a good laugh though) and I am quite happy to pay more than my share but someone financially profligate would put me off.

Fiercely independent but lives on credit and has asked for loans? Has no assets, pipe dreams of home ownership and prioritises hot tubs over pension. That’s not fiercely independent, responsible or a likely prospect for a long term harmonious partnership.

Don’t ever mix finances with him.

It is an essential part of a long-term relationship. Even if you maintain separate households forever, this sort of incompatibility could be a problem. You can’t plan together and save up for that dream trip once the kids are launched. You may have to watch a person you love struggling to work while you are comfortably retired. As you mentioned, it’s not really about income levels. That is a problem that is easily overcome by accepting a percentage based system. It’s the attitude about debt and planning that matters.

Wow, so many comments/questions, I'll try and respond to some of them:

The main question is whether it will annoy you (as opposed to whether you would be able to afford house kids etc which is at stake when younger)
I don't think it would annoy me, but I think I'd feel guilty and bored if DP has to carry on working for 10 years longer while I'm trying to live a life of leisure. Especially if DP did move in with me, and was having to work to cover half the bills. I wouldn't want DP to pay me rent or contribute to my mortgage payments (if it's not paid off by then).

Honestly I don’t think your DP will be buying that house. He could potentially let one or both of his children stay there and cover costs
I don't think so either, it's a pipe dream really. I've tried to explain to DP that time to get on the property ladder is running out, think DP is in denial about the reality of that, especially when they realise that mortgage repayments are going to be way, way higher than 350 a month!

There are some affordable, shared ownership, new builds just come on the market nearby. I've never thought much of the idea of shared ownership - you end up paying a mortgage on half, whilst still paying rent on the other. But when I saw that the rent element is at a reduced rate, it does make more sense compared to renting 100%. I pointed out to DP that would be perfect for them - they should pass affordability checks for the mortgage element, and the monthly rent wasn't much more than they're paying now (pro rata). But overall, the mortgage and rent combined would be about double DP's current rent, so they were having none of that idea. I did try to explain that you don't get something for nothing and the mortgage repayments are actually buying equity.

What I expect will happen is that DP will end up renting in social housing forever, of if they do move in with me will let their kids stay in the house (I think it's possible to reassign housing association tenancy to your adult children?).

What rule changes to right to buy?! Gosh just seen it. I totally missed that and I work in this sector.
I actually think this proposal might be a ruse by the government, and that in reality very few people will actually qualify - I think I saw somewhere that it's effectively at the discretion of the HA, and that they have to agree and be willing and able to provide replacement social housing on a 1 for 1 basis. Which seems likely to be a massive sticking point.
commonslibrary.parliament.uk/research-briefings/cbp-7224/

I'm impressed that on a low income you're able to overpay your mortgage enough to reduce the term by 15 years, make significant savings (enough to fund an extension) and make massive pension contributions all at the same time as raising you dc solo. Looking to retire early and go travelling on your pension....
Are you sure you're on a low income?
If his income is the same as yours and he only pays £350 rent what does he do with the rest? Does he blow the equivalent or your mortgage + savings + pension contributions every month?
To be fair, I'd overlooked my pension contributions when I said our incomes were similar. But that aside, my basic mortgage repayment is about £420 a month, and I'm overpaying another £350 on top. However, rising interest rates are going to affect things - the current increase has already added another 18 months to my early mortgage settlement, and further rate rises seem likely.

I'm not privy to all of DP's finances, but they work everything out on a monthly affordability basis rather than considering the long term cost. DP's car lease is about £350 a month and is also repaying a loan (for a luxury purchase), probably another £200 a month. I'd loaned DP a decent sum to clear a credit card debt, so they were repaying me another £300 a month. Beyond that I'm not sure where we're different. I did manage to convince DP to open a Help to Save account recently, and put in £10 a week so they have started saving something.

Fiercely independent but lives on credit and has asked for loans? Has no assets, pipe dreams of home ownership and prioritises hot tubs over pension. That’s not fiercely independent, responsible or a likely prospect for a long term harmonious partnership.
Fiercely independent in that DP doesn't want to merge finances or live together (me neither at this point, but I'm now wondering if DP ever would). DP never asked for a loan from me, I insisted as I could see DP was only paying off the minimum repayment and would massively overpay in interest terms.

To further highlight my point DP had recently been talking about another luxury purchase. Won't say what exactly, as it could be outing, but it's a £6-8k cost, plus ongoing running expenses. DP showing me details of a loan proposal and the APR was getting on for 20% (competitive or not, I don't know). I thought I managed to talk DP out of it - pointed out looming cost of living crisis, winter fuel bills, food inflation etc. I thought it would be barmy to stretch themselves and take on more debt in the current economic climate. And this purchase is for something DP has never tried before, I know it requires quite a bit of time and effort to get the most out of it, and I'm not sure DP fully appreciates that. I did then offer to go halves on the purchase (as much to reduce the amount DP would need to borrow for their half, and it's something we could use together, and would actually be much more practical with both of us). DP went quiet on it, so I thought that they'd seen sense. Until this evening when they tell me they've arranged to go and look at one next week. So totally snubbed my offer to go halves, which hurts, but is also a bit of a relief at the same time!