When it comes to love, many of us are on a constant quest to find the “right person. “The right person is attractive and kind, shares just enough of our interests, gets along with our friends and family, and makes us feel special. When we finally meet that person, we feel like we’re just supposed to know. It’s them, it feels good.
But when choosing someone to potentially spend our life with, a lot of us overlook a crucial point: money.
Money has long been known as one of the main causes of stress in relationships – probably because, for so many couples, it is a forbidden subject. Maybe you are not sure about your own financial situation, and discussing it with your partner would force you to face the reality of a serious situation. Maybe you’ve only been dating for a few months and you’re worried that bringing up such a “real” topic will hurt the good time you’re having. Or maybe you’ve never considered discuss finances with a partner and I thought it would all work out on its own.
But financial compatibility will play a huge role in the success of your relationship. Money is going to have an impact on whatever choices you and your partner decide to make or not to make. Are you going to to buy a house, have children, take early retirement? Each of these things requires considerable financial planning, and if you’re not on the same page or share the same values when it comes to money, it’s going to cause problems down the road.
But let’s be clear: Financial compatibility doesn’t mean you have to look for a partner with the same financial situation as you – or that you have to fire someone for not making enough money. On the contrary, this type of compatibility has a lot more to do with your respective attitudes and habits towards money.
Small consumer debt can be manageable, but if you found out that your partner owed the credit card companies tens of thousands of dollars, would that be something you could put up with?
When it comes to money, communication is key
I asked Talaat and Tai Mcneely, the couple of financial coaches behind His and his money, which they thought was the biggest challenge couples face when it comes to their finances. “I hate to say it, but everyone is pretty much the same,” Talaat replied, laughing. “This is usually a serious communication failure. Whether it is communication between them or communication with reality. The subject of money is like everything else in your relationship – it all comes down to knowing how to communicate.
Determining your financial compatibility can only start with one thing: a conversation. No matter what stage you are at in your relationship, it’s never too late to start. discuss money. To get you started, these are the three conversations you need to (at least) have.
1. The “This is what my money looks like” conversation
First of all: if you and your partner don’t know what your financial situation is like, you’ll almost have a hard time making a plan for your financial future. The first thing you need to do is disclose your financial position.
It’s a process Broke Millennial’s Erin Lowry calls financially naked: “Sharing our numbers doesn’t mean we suddenly exchanged ATM PINs and ran for a joint bank account. Instead, it provided a basis in which we could create what-if scenarios on how to handle money if we did decide to get married (an important conversation to have afterwards. [several] years of attendance).
This conversation is where you go through all the basics: how much you earn (net income), how much you owe (student loans, credit cards, and other debt), and how much you spend and save (up to the intensity of your budget, or if you are budgeting at all). Talaat Mcneely recommends starting the conversation with yourself and keeping things casual: happy when I’m done with those student loans … do you have student loans? I have an X amount, and you? It’s a way for you to understand, or at least gain insight into, what you might be getting into if the relationship progresses.
This is also a time to take note of anything that might worry you about your partner’s financial situation, such as debt. Lowry made sure to mention this when she had the all-important conversation with her partner: “Student loan debt isn’t a hindrance for me, but credit card debt is a red flag and a source of major concern. Small consumer debt can be manageable, but if you found out that your partner owed the credit card companies tens of thousands of dollars, would that be something you could put up with?
And remember that sharing goes both ways: whatever you want to learn about your partner, they should learn the same about you. If you yourself have accumulated a a large debt, you owe it to them to be honest about it. It’s much easier to tell them early on how much you owe and come up with a plan of attack than it is to wait until your debt has hit a seemingly unmanageable amount. Neither of you need to be perfect, but you need to be on the same page and open to working together on current or future money issues.
2. The conversation “What are our financial goals?” “
This is where you and your partner will deepen not only how your money looks now, but also what your current plan looks like and whether your financial habits and goals are compatible with each other.
Suppose you have always dreamed of owning a home and want to do so as soon as possible. You can be well before big expenses like taking a vacation or pay to rent a spot in a nicer neighborhood until you’ve saved enough to cover a deposit – is your partner on board with the plan? Conversely, let’s say your partner is the one with big money goals – do those goals interest you as well and are they willing to make sacrifices to accomplish them?
The reality is, even if you and your partner aren’t combining your finances anytime soon – or ever – their financial situation is going to affect yours.
The Mcneelys are a prime example of learning to communicate and compromise: When they first got married, Talaat was in debt, but Tai was not. But they decided paying it off was a priority, and they got rid of it in their first year of marriage. “We made a lot of compromises and a lot of changes,” Tai told me. “We had to say no a lot. We were newlyweds, but we ate at home, and a lot of times we didn’t go out, but we didn’t find our lives boring, you know? This was what we wanted to do because we knew the ultimate goal was to get rid of our debts. “
Again, it’s okay if your financial goals aren’t perfectly aligned at the moment. You just have to be willing to compromise to get to a place that makes you both happy and fulfilled, financially and otherwise.
3. The “How are we going to combine finances?” ” Conversation
Or rather: are we going to combine finances? Some couples choose to create a joint bank account as soon as they decide they are there for the long term; some decide to keep their money separate for their entire life.
Half Banked personal finance blogger Desirae Odjick says you don’t need a couple’s joint bank account, but you do at least need a joint account budget worksheet. “Regardless of how you structure your accounts, if you share decision-making power over a pool of money, a common spreadsheet is a valuable tool to help you keep track of that money and where it’s going,” writes. she. “Let’s say you’re not ready to split accounts, but you and your partner decide that the two of you will spend $ 500 on shared food for the month. If you have configured a spreadsheet, you can track your expenses (seriously, do it) every time you buy something that you consider to be within that budget. Restock of bananas? Totally goes within the food budget. Getting your nails done? Probably not.”
The reality is, even if you and your partner aren’t combining your finances anytime soon – or ever – their financial situation is going to affect yours. For example, paying down debt is another major financial goal. If they have a ton of debt to pay off, you may have to decide that you are okay with skimping on some areas of spending to help them achieve that goal. Even if you share everything 50/50, they will likely have to cut back on their expenses in order to pay off their debts faster, and you might feel the need to do the same.
Besides, whether or not to combine finances depends mainly on your personal preferences. You may feel the need to protect yourself by separating your finances. Others, on the other hand, may prefer to create joint accounts to make things as easy as possible. Either way, you should always be on the same wavelength when it comes to budgeting, as chances are that the vast majority of things you spend money on will be shared.
When you start having these conversations, of course, depends on you and your specific relationship, but many would argue that sooner is better than later. And know that you might not leave any of those conversations with a rock solid plan for your financial future, but that’s not the point. If you take the time to make room for someone in your life, you better believe that they are going to affect your finances, and you theirs. The more proactive you are in starting open conversations on these topics, the better off you’ll be in the long run.
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