Money-related stress is one of the biggest factors of relationship breakdowns. It is extremely important to have open communication and discussion with your partner about finances. You need to figure out whether you share the same financial goals and attitudes as this can really influence the longevity of the relationships.
Opposites really do attract and this can be the case when it comes to spenders and savers. But at what point are poor financial habits deal breakers in relationships? Financial compatibility is not about earning an equal salary or knowing a person’s net worth when you decide whether or not to date them. It’s about figuring out if their approach and attitude to money is similar to yours. It is usually a good idea to figure this out prior to big relationship milestones like marriage, kids or moving in together. Reaching these big life changes without a real understanding of the financial aspect of your relationship can lead to major challenges down the line.
There are some red flags that you should be on the lookout for. The first one is if they are bringing consumer debt into the relationship. I am not talking about a mortgage or Hecs debt or even a car loan. The debt to truly watch out for here is a large credit card or personal loan debt. Unless there is a plausible explanation for why and how they accrued this be very wary! This type of debt has the highest interest rates of all and if you find out they put their $6000 Europe holiday on a credit card then that is a potential recipe for disaster. If this is the case and you want to progress into a serious relationship with this person, then a discussion about this debt is certainly an important step to take.
Also, take note of if they have a frivolous attitude towards spending and are indifferent towards saving. If you are a saver with long-term goals of financial security then you will undoubtedly be planning for your financial future. This is probably one of the reasons you are reading this article in the first place! If you are dating someone who couldn’t care less about saving for a house or long-term wealth creation, then some issues may arise. People can change their habits and their money mindset if it’s important enough and early enough in the game. That’s why you should start an open and honest conversation early on in your relationship before too much time has passed and certainly before you get married. People don’t change without motivation and encouragement, they need to know if bad money behaviour is a deal-breaker to you in order to modify their habits. They may never be as strict when it comes to saving as you might be, but even small compromises and achievable goals can set the relationship up for success.
Big changes in your life such as having a child or buying a house can mean pretty big changes in the amount of income coming into the household. Taking time out of the workforce to care for children can mean a household that requires dual-income now only has half of what they are used to. If you can not trust your partner to control their spending during a time when it is needed most then the stress that this will cause you both could be intense. It is better to crunch the numbers early before being in a difficult situation. Don’t just expect that someone will change purely because they have too, you need to sit down and work out a financial plan with your partner.
Living outside their means or hiding purchases are other alarming issues! Pretending to be “wealthy” by spending money on designer clothes and fancy gadgets is just not worth it. Buying things to impress other people is mostly related to the view we have of ourselves. Insecurity can be a powerful tool in overspending on flashy things to try and impress our partners, friends in real life and on Instagram! If you notice this in your new partner, it might be worth asking them why they want to spend money on flashy items. Are they trying to impress you, or is it for themselves? Ask them if they would still buy that item if they were the last person on earth with no one else to see it? That is usually a good way to get them thinking about whether they really need to be spending excessive amounts on things, just to look a certain way.
Large differences in income can also cause issues in a relationship. If you earn double what your partner does then they are not going to be in the same position to save the same amount of money this week. Equity is important. The higher income earner will most likely be responsible for paying more of the household bills if that works for you. Of course discrepancy in income is not a bad thing, the more income coming into the relationship the better. However, power play’s where the high-income earner holds it over the low-income earner can be indicative of future problems. Just because one partner earns double still does not mean they should have the right to spend frivolously, just because it is ‘their money’ If you are in a serious relationship with shared financial interests and goals, then large expenditures should be discussed as a couple.
Most importantly practice what you preach! You can’t be upset at your partner spending $140 on a fancy restaurant dinner if you were there downing those cocktails and eating the steak. There are so many nice dates you can go on that don’t result in a large bill at the end of the night. Make it known that you would rather have a different date night that doesn’t come with a hefty price tag! You can suggest a home-cooked meal, a picnic, cheap take-out, whatever it is you like.
If you or your partner are really struggling with getting your debt and finances under control, there is help available. You can reach out to a free financial counsellor which is very different from a financial advisor. A financial counsellor is a professional who can offer support and advice to people that are struggling with bills and debt. They can help with assessing your financial situation, negotiating with government agencies, telcos, landlords etc. They can even refer you to other services if required.
Getting started on the journey to controlling your finances starts with honest discussion and admitting if there is a problem. Excessive spending, consumer debt & risky financial decisions can usually be fixed as long as you are both committed to changing your behaviour and attitudes towards money.
