One of my favorite roles as a friend is the trusted advisor for relationship advice. Not that I am by any means, any sort of relationship expert, more of a good listener I suppose. Once you find yourself in your 30s, some of your friends are going to end up single and others may decide it’s time to settle down, date or get married. Inevitably, you get the question, well what should they be looking for in a new relationship?
More than once I have quipped back, “if it were me, I would ask for a financial statement, request 3 years taxes and pull a credit bureau.” Now, I was mostly joking- well sort of. I’ve long thought that a great online dating idea would be to pair up potential partners using financial goals and expectations, instead of physical features or personality traits. Imagine the look on your parents faces when you confide that you think you’ve found “the one” and oh by the way mom, he or she has an 807 FICO score. I hope my daughters have that exact conversation with me one day- what a proud dad I would be.
Financial Values Compatibility
A good place to start is to just sit down and have an open conversation about money. It is important to understand the financial upbringing they experienced in order to understand if they came from a more affluent community, or, perhaps more meager beginnings. Money is openly discussed in many households, in others it likely doesn’t get brought up as much. All of this can work to mold and shape our personal views on money and how we approach our finances. This isn’t to say that different experiences are going to doom your compatibility. However, it can help to understand potentially where your partner is coming from and how they may view money in their adult life.
Many times, people think they value wealth and they may even say they love money. But my experience has been that many times these same people really must hate money deep down, because they obviously cannot stand to see a balance in their checking and savings accounts, due to an insatiable appetite for spending. A common misunderstanding many millennials have is not fully understanding the impact of auto, student and mortgage debt. Young couples can find themselves quickly moving in two different directions or often in the same, but wrong financial direction.
Do Your Spending Habits Mesh
In most relationships, one partner rises up and ends up as at least the primary budgeter or investor for the household. But as your high school basketball coach once told you, there is no “I” in team. A team approach is always the best way to tackle what can be a really sticky topic. We recommend each individual sit down and write down their top five financial goals. Then to make things really fun, compare notes. If you personally want to save for a lavish retirement and your partner desires a new sports car every three years, it’s time to talk through what that looks like. Writing down goals is also a great way to help you actually achieve them!
Fee-based financial advice is a great value for this area if you don’t feel comfortable going it on your own. Don’t be afraid to talk through these financial goals with an expert who can better explain to you both what sort of economic resources it will take for you both to achieve your most important financial goals. Most couples will find that their goals could end up as a compromise, however, it can avoid a huge disagreement later down the road.
We are huge proponents of keeping finances separate, but completing and maintaining the monthly and quarterly budgets together. At The Fiscal Savant household, there is no financial topic left untouched, and for good reason; we are striving for relationship success. There will be a separate article devoted fully to the art of maintaining this financial balancing act later!
You’re Going Into a Lifelong Partnership
Would you consider, for a minute, establishing a business partnership without performing a certain level of due diligence on your business partner before inking any sort of deals? Of course not! You would want to be fairly certain that you know what your partner is bringing into the deal whether it be assets, intellectual property, capital contributions, or if you are going to be jointly liable for any sort of obligations for that business.
Why do we treat our personal relationships any differently? Too many times, we have seen the ultimate life partnership that is marriage fall apart as a result of financial differences. Experts disagree as to the exact percentage of failed marriages traceable to fiscal incompatibility, however, they do agree it does play a vital role in a significant percentage of divorces.
It’s Never Too Late to Talk Money
For the married partners reading this article, you may be asking yourself how does your significant other’s financial style match up with that of your own? Even if you have been together for many years, it may prove an excellent and valuable exercise to sit down and hash out a budget. Often many disagreements can be traced back to poor individual financial habits or when one partner heads off on their own financial path without consulting the other.
Many times, the first real discussion about money may only occur after a joint checking account has been established or when there is the first financial emergency of the relationship. This won’t always be a perfect process and there will be disagreements. Just ask Miss Fiscal Savant how she feels about my criticism of her shoe and purse spending habits! The good thing is, she always stays within her budgeted amount that we sat down early on and worked to develop as a couple. I can honestly say we haven’t had any real financial disagreements that weren’t easily worked through with open discussion.
Good luck on your budget journey and if anything in this article strikes you as valuable, sit down and share it with your partner! Happy investing,
—The Fiscal Savant—
*This is for informational purposes only and should not be construed as financial advice. Please consult professionals for tax and investment advice. We are not liable for any losses incurred as a result of your investment decisions and also not responsible for any arguments that you may find yourself in when attempting to limit clothes budgets for your partner.