Meeting someone later in life can bring huge joy, but a new relationship can also be fraught with difficulty, particularly when it comes to money.
If you’re new on the dating scene after years of marriage, the modern rules of money will have changed. And they are ones all women would be wise to embrace.
According to a recent survey by Netwealth, while 31 per cent of women aged 16 to 34 now keep their finances separate from their partner, most women aged over 55 shared their wealth — even though one in three regretted not maintaining financial independence.
What still hasn’t changed is people’s reticence to discuss money with a new partner — and that could come at enormous cost. There are far too many examples of women, later in life, being duped by men who profess to be in love with them but who are only after their cash.
Financial adviser Heather McGregor recommends asking a man how much he earns on a first date, to check whether you are both compatible
Just because I am financially literate doesn’t mean I’m immune. Now, at the age 57, I am getting the occasional man with strikingly handsome looks signing up to follow me on Twitter.
When I examine their profile, they have usually only just joined Twitter and claim to be military personnel deployed overseas. I block them immediately because I know where the conversation is going . . .
Scammers frequently masquerade as former U.S. military personnel; the U.S. Army Criminal Investigation Command receive thousands of complaints each month.
But even when the relationship is genuine, people often move in together or get married without ever really knowing the other’s financial situation.
Yet money does matter. It is inextricably linked to bigger, sexier issues: confidence, family, fun, freedom. For a relationship to deliver the things that matter, you need financial as well as personal compatibility.
In later life, such issues are even more important as the baggage we bring isn’t only emotional or physical, but financial, too. And that is the kind of baggage that could end up scuppering you,
To protect yourself, you need to do far more than simply to manage your own money: you need to delve into your date’s finances sooner rather than later. Here, I set out my expert rules for staying on top financially when dating in later life . . .
She also said that you should never offer to pay for the man and should avoid risking the children’s inheritance (Stock image)
FIND OUT ABOUT HIS FINANCES ON THE FIRST DATE
We ARE always endlessly intrigued, if not obsessed, by people’s past romantic history when we embark on a new relationship. If they’ve never been married or in a long-term relationship before, then why? If they have been married, why did it end? Who was the woman and where is she now?
But along with this natural curiosity, we need to pay careful attention to the impact someone’s background will have on their finances. Perhaps there are children or grandchildren who depend on them. Perhaps they pay an ex-wife maintenance. These days, people may even have elderly parents needing financial support.
As you build up a picture of their domestic situation, work out what other financial commitments they have. For instance, do they still have a mortgage? Are they coping with the payments easily or is it a struggle?
Are they still working or are they drawing a pension? Do they have a defined benefit or other pension, or just the state one (currently, the maximum state pension for someone drawing it from the time they reach state pension age is £8,777 a year; if they deferred it for a number of years, it could be higher).
Of course, this kind of information might be a bit much for a first date, but investigations can be subtle — and knowing whether future dates will be in the Ritz or McDonald’s is important. I often elicit this information when the bill comes, as I believe in means-tested dating. In other words, we split the bill in proportion to our income. I give a rough indication of my own income and invite the other person to say how much of the bill they think they should pay.
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IF HE ORDERS LOBSTER . . . CHUCK HIM BACK
You’re eating (his treat) at the finest restaurant in town; he’s having three courses, one of which is lobster, and he just ordered a bottle of champagne. He’s rich, you might naturally conclude. In fact, he may just as easily be broke, in heavy debt and relying on a credit card or ten.
Excessive spending on dates should be a red flag, not a gold star. Often the wealthy are the most cautious spenders, while those living on loans have a carefree attitude to money.
In fact, he may just as easily be broke, in heavy debt and relying on a credit card or ten
Debt is not only often devilishly disguised, it is also the most important thing to discover about your date. So the next conversation I would have with any new love interest (maybe on the second date) would be about debt. Specifically, how many credit cards do they have? What other debt? What would they borrow for? Houses, holidays, a Porsche, a Burberry suit?
There is nothing wrong with debt, but it needs to be used sparingly and, in later life, can be a massive burden. Knowing how much money, if any, they owe, and how it relates to their earnings, will give you some idea of the level of financial responsibility they are capable of.
If, for instance, you find they have given credit cards to their children and have no idea how much they are spending on them, then they are either able to afford anything they want, or irresponsible. Establish this before agreeing to a third date!
NEVER, EVER, LEND HIM ANY MONEY
There are far too many examples of women in later life being duped by men who profess to be in love with them but simply want their cash.
Every day seems to bring a new tragic story and there have been many high-profile cases lately, such as Carolyn Woods, 54, who after her divorce met an apparently charming man and, amid plans to remarry, lent him the proceeds of her house sale and savings, totalling £850,000. The man swiftly disappeared to Spain, leaving her destitute.
The financial adviser says excessive spending on dates should be a red flag, as the wealthy tend to be the more cautious spenders (Stock image)
One widow, Debby Montgomery Johnson, lent a million dollars to a man she met online who claimed to be a British businessman but transpired to be a Nigerian scammer.
It’s no coincidence that both these women were in their 50s. Sadly, as I have found myself, older women are targets. ‘Mark John’ is a recent example of someone who targeted me on Twitter. The giveaway is his atrocious English. His Twitter profile says (and this is an exact quote): ‘I am a military doctor form united state, but currently working on Syria for peacekeeping evolution.’
I wish most scammers were so easy to spot. A simple rule is: if someone asks for money before you’ve been dating at least a year, it’s a scam.
ARE YOU CREDIT COMPATIBLE?
Most of us are very interested in the sexual health of any new partner, but for some reason less concerned about their financial health. Yet both can be dangerous. You still need a serious discussion about credit scores as soon as the relationship goes beyond a few dates.
Your credit score is a number that shows how likely you are to be accepted for credit. It’s based on the publicly available record of how you’ve handled credit in the past. Have they ever been bankrupt? Had a county court judgment against them?
This would all be revealed by reading their credit report. Why don’t you suggest opening a bottle of wine and then spending the evening online getting yours together?
You should also check you and your partner’s credit score, she recommends, as it will reveal how careful they have been with money
Lenders have access to your score, so if you want to buy a house or borrow money with your new partner, lenders will look at the lower of your two scores when deciding whether to agree, and what interest rate to set. So if your boyfriend has a bad score, that could cost you money.
There is another reason to ask for their credit score, according to a 2015 paper published by researchers attached to the U.S. Federal Reserve Bank.
The researchers found that people with high credit scores are more likely to form committed relationships, and your relationship is likely to last if your credit scores are high and similar to each other’s. Financial compatibility is crucial.
PROTECT YOUR KIDS’ INHERITANCE
In later life, once you decide to live with your partner, you will often buy a place together.
To do that, many people sell their own respective homes first, if they have one, then put all their proceeds into the purchase, usually in unequal proportions. If you do buy property with your new partner, there is an important question to ask. And a very important piece of paper to have.
The important question is exactly how you are going to own the property with them. You have options.
In England and Wales, you choose one of two ways to legally hold the property between you. This is either as joint tenants, which means you own the property collectively and if one of you dies ownership is automatically passed to the other one; or as tenants in common.
Most of us are very interested in the sexual health of any new partner, but for some reason less concerned about their financial health
The latter means you own the property in common, but have a pre-determined percentage of it, and that share can be sold to others, mortgaged in its own right or, importantly if you have a family that pre-dates the relationship, left to someone in your will.
Unless there is good reason to do otherwise, I would always elect to own as tenants in common if buying later on in life, and then make a will leaving your partner a life interest in the house. That way, they don’t get kicked out if anything happens to you, but neither will they own it and then be able to leave it to their own family instead of yours.
Either way, I recommend you get a critical piece of paper, ‘a deed of trust’ (also known by various other names, including a ‘declaration of trust and co-habitation’, a ‘trust deed’, or a ‘co-ownership agreement’). This is a legal agreement between the joint owners of the property and allows you to specify the amount each person contributed, their share of the property, plus what happens if someone dies or wants to move out, or if there is a dispute about how to develop the property or when to sell it.
I am often asked if a pre-nuptial agreement will do the job instead. But a pre-nuptial (full disclosure, I had one of these when I got married 30 years ago) is not valid in the UK, but a deed of trust is.
SEPARATE IS GOOD WHEN IT COMES TO MONEY
The days are long gone when a woman saw a joint account as a mark of equality, demonstrating equal control of house finances.
Forty-five per cent of British women who keep their wealth separate do so to maintain financial independence, says Netwealth. Younger people in particular are thinking twice before opening a joint current account, and with some justification.
Not only do you have to trust the other person not to misuse your money, you also create what is called a ‘financial association’ with them, and if they have a poor credit history you could be marked down for that.
Heather advised keeping your bank accounts separate and company Netwealth has found that forty-five per cent of British women who keep their wealth separate do so to maintain their independence. (Stock image)
Finally, any overdraft or borrowing on the account is the joint liability of you both, regardless of who borrowed the money.
Keep finances separate and only open a joint account if you need to — for instance if you take out a mortgage together. Leave that account for paying the mortgage and bills, and continue to deal with things like holidays separately. If you are not earning the same amount of money, then agree who is going to pay what proportion of the mortgage and bills, and contribute accordingly.
But don’t close your personal account; apart from financial independence, it allows you to continue building up a good track record with your own bank.
MAKING A WILL IS ESSENTIAL
You might be head-over-heels with your new partner and want to provide for them in the event of your demise, but if you are forming that relationship later in life, there may be other people you want to share your money.
Alternatively, you may wish your new partner to inherit rather than your nearest blood relative, but if you die without getting married or having a will in place, then the relative gets the lot.
You can make a will very cheaply. You can download a sample will from the internet and adjust it to reflect your wishes. Make sure when you sign it you get two witnesses or it won’t be valid!
A local solicitor may not be as expensive as you think; I would expect to pay about £300-£400.
- Mrs Moneypenny/Heather McGregor is the author of Financial Advice For Independent Women (Penguin).