You both love dogs, love the same movies, and can sit quietly in silence for hours on end, as long as you’re together. In short, you think you have found “the right one”. But what about your financial compatibility? Are you sure your financial styles match? Here are five signs it’s time to be on the same financial page.
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1. Hidden debt
If you or your partner are hiding debts from each other, there is an obvious problem. Hiding debt can be a sign of shame, embarrassment, or just plain lack of confidence. No matter how much you enjoy being together, financial intimacy means sharing the good and bad details of your financial life.
Financial privacy depends on being honest about even the most embarrassing financial details. If you haven’t mentioned how much debt you are in, now is the time to put things in perspective. If you think your partner is sitting on a pile of hidden debt, clean the air by creating a safe place to share financial secrets.
2. Too quick to use credit
A sure recipe for stress is when a partner takes out credit to pay off whatever pleases them, without a clear plan to pay off the debt. Worse yet, a partner expects you to bail them out when they are too deeply in debt.
While your partner’s spending habits can be a touchy subject to discuss, their ability to manage credit can come back to you.
The same goes if you are the one who uses plastic without giving it much thought. Unless you pay off your credit cards in full each month, you risk incurring high interest rate debt. The problem with high interest debt is how quickly compound interest accumulates and the difficulty in getting out of debt once you’ve let that interest rise.
If you are serious about your relationship, your partner has a right to know about your debt, and you should know if your partner is having trouble buying on credit. Ideally, you can work together to overcome the problem.
3. Bad credit
Let’s say you have great credit, but your partner has spent years randomly paying bills and their credit rating is bad. You usually take public transportation, but you’ve gotten far enough away from work that you both think it’s time to buy a car. You plan to buy it together. However, your partner’s credit rating is too low to qualify for a loan. Unless you earn enough to qualify on your own, you may have to wait to make the purchase, all because your partner has a low credit score.
Relationships change. It’s neither good nor bad, it’s just inevitable. Minor irritants that you can ignore early in the relationship (such as a partner with low credit) become significant and irritating. Like a pebble in a shoe, the longer you hold onto it, the more painful it becomes.
Before things get dire, sit down and discuss the importance of a good credit score. No matter which of you has poor credit, consider working together to give it a boost. Meeting the challenge together provides opportunities to make financial decisions and develop new financial skills as a couple.
4. Chronic unemployment
Millions of Americans lost their jobs last year due to COVID-19. And between 2000 and 2010, manufacturing in the United States fell by a third, forever changing the employment landscape. Job losses are occurring. But if your partner never seems to find a good enough job for them or is repeatedly laid off, you might have a problem on your hands.
If you are looking for a sense of financial security, a chronically unemployed partner will likely be a challenge. Prevent it by finding out if your partner’s job losses are circumstantial (due to a recession, pandemic, or natural disaster) or choice (absenteeism, drug use, or verbal altercations). If the losses are due to circumstances, work together to find potential solutions, such as networking to find a job or starting a business. If the job losses are due to your partner’s choices, dig deeper to see if this is a situation you can live with.
5. Different dreams for the future
The safest way to run into a financial hurdle with your partner is to assume that you share the same dreams. If you haven’t discussed where you see yourself in the future, ask your partner what their dreams are. If you dream of marriage, kids, and a house in the suburbs, and your partner dreams of retiring at 35 and volunteering with Doctors Without Borders, you must know it.
Different dreams require different financial planning. For example, if you plan to live in the same city for the next 40 years, taking out a mortgage isn’t a bad idea. If you plan to travel the world, buying a home is a riskier proposition.
As warm and fuzzy as any relationship begins, there are always bumps in the road. The good thing about problems – even financial problems – is that once you solve them together, you have a plan for dealing with all kinds of day-to-day problems.