Whether it’s planning a vacation, moving in with someone, or simply deciding what to eat for dinner, almost every decision we make in our lives involves money in some way. And how you and your partner communicate about these daily decisions will dictate the strength of your relationship together.
Let’s face it, sitting down and having the “money talk” with your significant other for the first time can be a difficult task – which is probably why the subject is often overlooked by couples until its too late. Because unfortunately, it’s usually a financial crisis that forces couples to finally deal with their finances. And if you are faced a crisis, instead of having a calm discussion about goals and your future together, you will most likely be stressed out, with no financial plan to get you back on your feet.
Here are a few things to consider when you decide to have the money talk with your significant other:
When to bring up money in a relationship
Talking about money will never be the most romantic thing to do in the world, but consider that a recent TD Canada Trust poll revealed that 72% of people would not marry someone who was bad at managing their finances, or if they held excessive debt. The poll, which surveyed British Columbian adults currently, or recently in a committed relationship, found that nearly 40% wouldn’t even date someone who didn’t have their finances under control.
A similar ING Direct survey found that 92% of Canadians believe it’s important to date someone with a similar outlook on money, but only 50% of Canadians said they knew everything about their partner’s finances.
So while you don’t need to bring it up on your third date, you shouldn’t wait until you decide to get married to start talking about money either – because by then, it could be too late. You might be compatible in many ways, but if you’re not on the same page financially, it could lead to a relationship disaster. Starting to discuss big picture personal finance goals should happen as soon as you’re in a serious relationship and you start to see a future together.
Luckily, Nic knew I was a personal finance blogger right from the beginning, so there was no need to tiptoe around the subject of money. While he will never be as detailed or obsessed with money management as I am (not that I’d ever want him to!), he does have the basics down – like spend less than you make, and not carrying a balance on a credit card. And most of the time, he’s even more frugal than me!
Observe their spending habits
You can tell a lot about a person by how they manage their day-to-day finances. Do they dine out a lot? Are they constantly complaining about being broke? Do they know how much money is in their bank account? Do they not care about the price of the things that they buy?
You might love your partner, but if he’s a spender, and you’re a saver, will you be able to come to a compromise? Openly discussing money with your partner is the best way to prevent future arguments. Talk about your spending and savings habits, and what your financial goals are for the future.
I’ve been both the spender and the saver in relationships before, and it can be tough when you and your partner have opposing views on money. It’s frustrating! And it always leads to arguments. But now that I’ve turned my finances around from the disaster it once was, I know that there’s no way I could ever be in a relationship with someone who is bad with money. I need my goals, and hopes and dreams to align with theirs, and if they don’t care about saving for retirement (or saving in general, and living a debt-free life), I can’t stand still and wait for them.
Be honest about your debt and past mistakes
When you enter into a new relationship with someone, chances are you will have to deal with debt at some point. You or your partner may have student loans, a line of credit, maxed out credit cards, or even a mortgage. If you are planning a future together, you both need to disclose exactly what kind of debt obligation you have, because that can greatly impact your household budget, as well as your future financial goals.
Consider your personal finance goals
You will most likely never have every personal finance goal in common with your partner, but it’s important to find some common ground and go from there. Take the time to talk to each other and consider your short-term goals – like saving to buy a flat-screen TV, or that trip to Hawaii, as well as your long-term goals – like buying a home together, paying off your student loans, and what kind of retirement lifestyle you want to have.
Be honest with yourself; if you don’t see your goals lining up with theirs, it’s important to be voice your concerns now – rather than 10 years down the road.