Values, hobbies, interests and whether you think pineapple belongs on pizza are not the only compatibility factors a couple needs to consider when in a relationship. They must also figure out how compatible they are on a financial level. If you are in a serious relationship and have never struck up a conversation about each other’s personal finances, I highly recommend spending some quality time getting to know each other’s financial habits.
WEAR YOUR FINANCES ON YOUR SLEEVE
In a relationship, it’s important to be open and honest with your partner, and your finances are no exception. While you may fear being judged by your partner, it is necessary to understand where you sit financially as an individual and as a couple. How much debt do you have? What investments do you have? What is your current bank account balance? What is your credit score? What are your financial goals and do you wish to achieve them individually or as a couple?
It can be hard to open up to someone, especially about your finances. However, most milestones in a relationship—e.g., buying a house, getting married, having a child or retiring together—involve money to some degree. It’s important that you and your partner are on the same page and understand each other’s financial pace towards achieving these milestones.
THE FINANCIALLY INCOMPATIBLE
As a Licensed Insolvency Trustee, I have the opportunity to observe the behavioural characteristics of couples I meet who are confronted with difficult financial situations. While every relationship is unique, there are common characteristics that couples have which can allude to the fact that they aren’t financially compatible. Below are three “types” of financially incompatible couples that I most commonly meet with.
1. The “Half-In” Couple – This couple consists of one partner who essentially handles everything having to do with money, even if that person isn’t the main breadwinner. This one partner makes the majority of the savings and investment decisions and deals with paying the bills. The other partner either has some to little idea of their financial situation or is completely oblivious to it.
People in this type of couple typically make statements such as: “Oh, I have no idea how much we owe on that account, my partner deals with that”, “I just earn the money and it’s up to my partner to get everything paid”, or “they don’t worry about the bills, I handle them.”
For example, I’ve had a couple give two significantly different numbers when asked how much they owed on a credit card account. One partner said $2,000, the other $12,000. It was an equally embarrassing moment for both partners as one realized they’d been in the dark all along and the other felt extremely guilty for hiding the actual amount from their partner.
The major difficulty with this kind of financial behaviour as a couple is the lack of shared accountability when things go south. In this situation, it’s easier for the financially responsible partner to be blamed when times may be tough. Blaming one partner for your financial woes as a couple can cause resentment, guilt, arguments and inevitably strain the relationship.
2. The “Opposites” Couple – This couple consists of one partner who is a spender and the other who is a strong saver. One person budgets and tracks every penny, while the other freely purchases on debit or credit without truly knowing if there is money in the account or credit available. This couple tends to carry on and maintain their household with a lack of financial communication. Often, they keep their finances separate, and the spending partner might also have “secret” purchases from the partner that handles the budget.
People in this type of couple tend to deal with their finances separately. As someone in the financial industry, I typically hear statements from members of “Opposite Couples” such as “we keep our finances separate because I can’t trust my partner” or “do you mind if we meet separately from my partner? I have my own issues that he or she don’t know about”.
The major difficulty with this kind of financial behaviour as a couple is the fact that you aren’t on the same page. Not being on the same page financially can make it challenging to set goals as a couple. It can also be very isolating for the partner who is the saver. If they are sacrificing their financial goals to aid the spender partner, this can be very discouraging. Again, it can lead to resentment, guilt and strain on the relationship.
3. The “Inner-Struggle” Couple – Ironically, this is a couple where both partners actually know their financial situation and have shared financial goals. However, they share destructive financial behaviours which can cause red flags. These habits are hard to break, especially if you have someone close by to feed off of their behaviour. This couple loves to ‘keep up with the Joneses’, and they place a high value on social spending. For this couple, keeping up appearances in the short term is more important than saving for the long term.
People in this “type” of couple tend to know they are in a tough spot financially, but they focus on the materialistic things they have. They make statements such as: “we’ve been living from paycheque to paycheque for years but we still manage to buy the things we want and take vacations whenever we want” or “we have a great car and a big house but have no savings and no emergency fund and we haven’t even thought about retirement.”
The major difficulty with this kind of behaviour as a couple, aside from carrying high debt levels, is the fact that this is a difficult spending personality to resolve. This type of destructive financial behaviour stems from deeply rooted experiences with money from early childhood. These experiences can be tricky to put together and are typically difficult to admit and work towards changing as adults. People who are social spenders are usually accompanied by compulsive or addictive behaviours as well.
TILL DEBT DO US PART
Different money management habits can cause a lot of tension and stress in a relationship. This may lead to constant arguing, resentment and even secrets, which can cause strain on any relationship. While some couples are able to work through their financial disagreements, many are unable to work past them, which leads to separation and divorce. In fact, money fights are said to be one of the leading causes of divorce in Canada. If your finances aren’t in order when you do separate, it can cause even more distress, as one of the top causes of insolvencies and bankruptcies is the breakdown of a marriage or common-law relationship.
Do not worry if you don’t achieve perfect financial compatibility as a couple, however, you can set a good foundation to your already emotionally sound relationship by committing to talk about money. Having the conversation early on in the relationship is a worthwhile preventative step to future financial misunderstandings and grievances. If you’ve been together a long time, it’s never too late to identify weak financial links in the relationship. Set up a “money” date with your partner one evening (glass of wine included) where each of you takes turns revealing where you sit financially. Remember, it’s not about judging each other financially, it’s about taking that giant leap towards achieving an open and honest partnership.
If financial stress and overwhelming debt are causing strain on your relationship, reach out to a Licensed Insolvency Trustee. During a free, confidential consultation we will take a non-judgmental look at your finances and discuss which debt relief solutions are available for you both individually and as a couple.