It’s no secret that finances are one of the biggest causes of arguments and disagreements in relationships and one thing a lot of couples fail to do before they enter a relationship is to have a detailed discussion about their views and ideas on money and finances.
New relationships can be exciting, intoxicating even, you want to spend as much time as you can with this person, unfortunately these new relationship feelings tend to override some less desirable relationship traits of your new partner, even papering over some red flags, particularly where money is involved!
How can you avoid this? Firstly, know what is important to you, where do you stand on all things money and know what you want out of your partner in this area. Once you’ve got a deeper understanding of where you stand it’s a lot easier to then communicate this to your partner.
Below we go through some finances and relationships points to discuss with your new partner before embarking on a relationship with your special person.
1. Have a deep and meaningful discussion with your new partner
We’ve touched on knowing yourself, now it’s time to discuss your money and financial views with your other half to find out where they stand on this. Communication is one of the most important aspects of any relationship, unfortunately this is regularly overlooked in new relationships when it comes to money.
Fast forward a few years and money issues start affecting the relationships, issues that could have be dealt with earlier on in the relationship. Some of the key points are finances you should be discussing include:
—-What are views and experiences with money?
This topic can devolve into other areas (as touched on below) however look at basics such as are you a planner, intricately tracking every dollar you earn and spend or are you more loose with your spending and tracking your income? Are you a spender or a saver? Do you constantly struggle to keep your credit cards on track or are you a disciplined saver? If one half of the couple loves to spend and the other half would prefer to save, then some common ground is needed to be found or this will likely end up being messy so tackle these financial issues early on.
Other points for discussion could include:
- Do you have savings and investment targets or goals and if so, how are you working towards these?
- What is your saving, investing and spending personality?
- Do you have an emergency fund or savings or investments?
- Are your finances planned to the cent and run automatically or are you more laid back around these?
For those who are at a different stage of life, other questions could include:
- What are your retirement plans?
- Any property downsizing plans?
- Have you got a retirement plan(s) in place?
- What state or city you will be retiring to?
—Will you be pooling your money or keeping everything separate?
For some relationships couples think nothing of pooling their finances and doing everything as a team. For other relationships (particularly those with older couples with previous families) there can be a preference to run everything separately however divide up the bills and the portions to be paid by each person. As long as you are both on the same page there is now right or wrong way to do this.
Once you’ve chosen your preferred method, how will this work and who (if anyone) will be in charge of the household finances (i.e. paying bills)? If you are going to pool your money and operate from a joint account, how will this work, will there be separate bank accounts for each of your personal spending or will your personal spending come out of the joint account.
Whilst the path you choose for your joint finances is up to you, if you do choose to operate everything jointly, we do that women have their own personal accounts in the case. We’ve seen too many examples of women having issues with emergency access to money in the event of a relationship breakdown so for peace of mind (where possible) have a small amount save in your personal bank account for emergency purposes.
—-Discuss your credit scores and ask if there were any serious money/debt issues in the past?
This could range from significant personal or credit card debt or even bankruptcy. Whilst your partners credit score will outline most of this, if there are previous financial issues, have these been resolved or are being addressed? Yes financial red flags are a big warning sign, if they are being rectified and you see significant improvement on this area, this shouldn’t be a hinderance to your relationship. If you see a horrid credit score and there has been no effort what so ever to repair and improve their financial situation it’s time to cut bait and run. History shows that it won’t end well and you’ll likely be thousands of dollars in debt, exhausted (with likely mental scars) and very wary with future relationships.
Also ask yourself what’s a level of debt or a financial low point for your potential partner that you will draw the line at. Take away romantic feelings from this decision and try and use a clear head when making this decision.
Whilst you are on this topic it may be an opportunity to chat about if there were any past legal indiscretions.
—What are your financial goals (if you have any) and what do you want out of life?
Whether you are pooling resources or keeping everything separate, you both need to be on the same page with the big financial picture. Mismatched goals can be a big issue in relationships and a source of many arguments, this goes double around the topic of finances. Financial goals and life goals go hand in hand and should be discussed in the early stages of a relationship to see if you want the same things and are on the same page.
A lot of people enter relationships without thinking about what they want not just out of the relationship but also not really knowing what they want out of life. Do you want to buy a house, do you want to travel, are kids going to be part of your future and how soon do you want to “settle down”?
If one half of the couple wants to travel the world and the other half wants to stay put and build roots then there is going to be likely future issues. Yes you may make concessions however resentments will likely rear in the future jeopardizing the relationship. Find out what you want and communicate this to your partner. Also be realistic and don’t try and change the other person.
In most cases people are who they are and not likely to change.
Some people like to plan to the minuscule detail while others like to cruise. There is no right or wrong way provided you are both aligned on the big points of what you want. It doesn’t matter how you get there as long as you reach the destination.
2. Are your intentions correct when entering this relationship
Are you entering this relationship for the right reasons or are you selling yourself out? This could be having a fear of missing out, not wanting to be alone, entering a relationship to leave a bad situation, not feeling worthy enough to wait for someone more suitable, concerned about being “left on the shelf”, concern about leaving it too late to have children, wanting someone to take care of you, wanting someone to run your life, wanting financial security or improve career opportunities, just to name a few of the wrong reasons people enter relationships.
If your intentions are where they should be there is every chance this could undermine, erode and eventually end the relationship. This will likely set you back financially as well as losing a significant time investment, all of which could have been avoided if you were true to yourself before entering the relationship. Where possible do your best to avoid power imbalances in romantic relationships whether it is money, age or social status.
The same can be said if you or your partner is hiding a secret. In nearly all cases this will eventually come out and likely damage trust in the relationship. Be open at the beginning and let the cards fall as they may once you’ve spilled your secrets. If the person can’t handle your secret before you enter the relationship they aren’t for you and you’ve saved yourself time.
3. Outline a joint financial plan
Once you’ve had the discussion of where you want to go financially, it’s time to outline a plan to get there.
This could be something simple such as preparing a simple budget and putting aside your surplus to an interest bearing savings accounts. Or you can put a detailed plan in place with a transaction account hub with sub accounts for future purchases, emergency funds, accounts for surplus savings, 401K accounts and detailed investments.
Do what works for your both and make sure you stay consistent. At the very least set up a simple budget, automate your finances where possible and save regular amounts each month. If savings are short, the look for ways together that you can boost household income.
If you are entering a relationship with a partner who’s financial past is sketchy to say the least, whilst this should be a significant red flag (and the reasons for this discussed in detail) this doesn’t need to be a relationship killer, providing your partner is making amends and is serious about doing whatever it takes to right the financial ship.
If you truly believe your new partner is going to make amends or there are extenuating circumstances around their financial malfeasance then give them a chance however keep a very close eye on how this is being managed and if there are no improvements or change after a few months (in spite of what they said they were going to do) then it’s time to end the relationship.
Whilst you can have the best plan in the world if all participants aren’t on board and pulling their weight, you won’t get the outcome you desire.
4. Check in with each other every 6-12 months
Communication is vital for any relationship so make sure you are continually checking in with your partner. With your finances, have a sit down every 6-12 months to make sure you are both still on track, that you still share the same financial goals and still want the same thing.
Depending on your financial situation it’s likely that sacrifices will need to be made to reach your joint financial goal so make sure this is still the case and you are still on the same financial path. During these sit downs it can also be a good time to plan bigger events such as future travel destinations, future career opportunities, future house purchases and planning for children.
Depending on the level of financial intricacy of your plans, this could involve discussions around your current investment as well as future investment planning and looking to improve your financial education and knowledge.
Whilst money and finances can be a contentious topic in relationships, with sufficient communication there is no reason why this should derail or affect your relationship. If anything these discussions should strengthen your relationship as it shows that you are a team fighting for the same goals.
If you find that in your initial finance and money discussions that your new partner isn’t the right person for you or that your relationship isn’t going to last, wouldn’t you want to find this out early on in your relationship before it gets messy and painful?
Keep your lines of communication open, work together as a team and there’s no reason that you shouldn’t be able to thrive financially and as a couple.