Money Talks When Relationships Get Serious
Couples fight more over money than anything else . You and your partner can be completely compatible in every way, but when it comes to money, sparks fly. Getting to one page financially can be tricky. To keep things simple, talk about a few important topics as the relationship gets serious.
In the future, you may be surprised to learn about your partner’s financial habits or history. Knowing this information ahead of time can help you prepare for potential disagreements. This may not prevent fights completely, but at least you will know what you are getting yourself into. Plus, preparation is imperative to meeting your financial goals. Here are some questions to ask to start a conversation.
What is the debt situation?
If you don’t take out a loan or sign something for your partner together, you are not liable for his debt until you get married. Even if you do get married, you are still not responsible for any debts your partner took on before marriage. We have explained how this works in more detail here .
The bottom line is that before marriage, your partner’s individual duty, if your name is not attached to him, is his own. But that doesn’t mean it won’t affect your relationship. This can affect your budget, savings goals, and even some milestones you can share. When things get serious and you are discussing money for the first time, ask about each other’s debts. Try to answer the following questions:
- What is the debt repayment plan and how long does it take to get out of debt?
- If you get married, will the debt remain separate or will it become a joint responsibility?
- How will individual debt affect your joint expenses or budget?
- Will debt keep you from making big purchases together? Going on a trip? Create a family?
Some of these questions may seem overwhelming if you are just starting to get serious about your relationship. You may be living together, but are not yet ready to think about starting a family. You should definitely act at your own pace, but be sure to answer these questions as the relationship develops.
What is your credit rating?
Credit history is like debt. It remains individual – when you get married, your credit histories are not pooled. But one partner’s bad credit can affect things like buying a house, getting a car loan, and even renting an apartment together. You need to know what each other’s strengths are in order to make the best financial decisions.
Review each other’s credit scores and report. Here’s what you should glean from the information, according to CreditCards.com :
“If one person has a terrible credit rating and another has a flawless one, you probably want to keep them separate and work with the other person to fix what they are facing,” adds Glass. However, the best scenario is to take the time to earn each other’s trust before tying together your financial future, experts advise.
This is a general recommendation, but they add that a “good credit” spouse should probably take out a mortgage and other lines of credit. You want someone with a better credit rating and history to apply. Otherwise, one partner’s poor credit rating could mean that you will receive higher interest rates. If a marriage is around the corner, some financial experts even suggest postponing it until the creditworthiness of both partners is healthy.
Of course, if there are any foreclosures, bankruptcy or unpaid debts, you will definitely want to disclose that information as well. This can have a big impact on future financial events.
How much do you earn and spend?
When things get serious, it usually means you start sharing parts of your life together. This is why it is incredibly important to know your partner’s money habits as a relationship develops. You will likely start sharing bills, rent, restaurant bills, vacations, and other things for the couple. Both of your money habits can affect these joint spending. You need to know what comes in (how much they make) and what comes out (how much they spend).
If your income or money habits vary greatly, it’s helpful to find out sooner rather than later. This way, you can prepare for any challenge. Sit together and share the following:
- Spending Habits: Review recent purchases and expenses. Feel like both of you are spending. How similar are your expenses? How is it different? How can these similarities and differences affect your goals and relationships?
- Income: how much does each of you receive? How will this affect your budget? If you decide to get married, how will this affect your taxes? Check out our guide to taxes for newbies when you get married to learn more about it.
- The “Philosophy” of Money : Find out how you both feel about money . Are you wasting all the opportunities that you have? Is your partner too obsessed with saving? Knowing how your views differ can help you anticipate any potential problems in the future.
- Budgeting Habits : Is Your Partner Avoiding Budgeting? Then maybe you should tackle joint spending. Maybe you both have a budget, you just have a different budget. Knowing these habits will help you develop a plan that works well with each of your habits.
- Savings Goals : If you or your partner have any individual savings goals, you’ll want to know about them too. As with debt, you may have to budget around it.
These points will also help you decide whether to split the finances or combine them. For example, you have different habits. We’ve written about how to fix this problem before , and it all comes down to regular communication and compromise. But you can also explore the idea of maintaining a joint account for general expenses and separate accounts for individual expenses.
Even if you haven’t yet reached the point in your relationship where you think about pooling finances, this conversation is essential. Whatever you decide, it will be easier for you to get to the same page later.
What are your long term savings goals?
Depending on where you are in the relationship, you can discuss any common long-term goals that require money. For instance:
- Traveling
- Moving to a new city
- Buying a home
- Starting a family
- Savings for retirement
You will also want to share your personal long-term financial goals. For instance:
- Back to school
- Career change
- Debt repayment, as mentioned
Knowing your individual and overall savings goals can help you create the best budget together. You also know what to expect in the future.
Retirement probably seems like a serious topic that is far from the future. But if you are thinking about being with your partner for a long time, you need to know his retirement plans. Maybe they haven’t started saving yet, and you will have to work with them to catch up. Neither of you may have started hoarding, and you need to figure out how to start together. The point is that your goals, or the lack of them, can influence each other if you share the future together. Know what to expect so you both can plan accordingly.
Money isn’t all that romantic. But it is better to talk about finances now than to fight them later. While these conversations are a little boring, they will help you prepare for future joint opportunities. Learn about each other’s habits now, and it will be easier for you to come to a consensus in the future.