VALENTINE’S DAY IS THURSDAY AND TODAY WE ARE TALKING LOVE AND MONEY.
While millions of people are making plans for Thursday, a much smaller number is thinking about the role finances play in their relationship. And while talking about money isn’t exactly romantic, it is a mistake to ignore the role it can play in relationships. Money is among the top reasons couples fight, and it may even prevent you from finding someone in the first place!
WITH THOSE WHO ARE LOOKING FOR LOVE, FINANCIAL HEALTH CAN BE A BIG FACTOR, RIGHT?
If you are trying to find Mr. or Ms. Right, your credit score might matter a lot more than you think. Since the financial crisis, numerous surveys have found that financial factors have taken on greater importance when it comes to attractiveness. Take debt: a recent survey from Finder.com found debt is a key consideration.
Nearly three-quarters of American adults (72%) said they would reconsider a romantic relationship because of the other person’s debt. Respondents said credit card debt was the biggest concern, with 56% citing that as a red flag, followed by student loan debt (52%), and payday loan debt (49%) following close behind.
This is not to say that if you have some student loan debt you are destined to be single, but it is a good reminder that healthy financial habits have benefits that go beyond money. So, check your credit report for errors. Pay your bills on time. Put a premium on living within your means and paying down outstanding debt. Start saving for retirement. This will put your finances and perhaps your dating life on a more secure financial footing!
WHAT IF WE ALREADY HAVE SOMEONE WE ARE SWEET ON? HOW DO YOU START OUT A RELATIONSHIP ON THE RIGHT FOOT WHEN IT COMES TO MONEY?
Honesty and transparency are imperative when it comes to finances. A recent CreditCards.com survey found 19 percent of people in live-in relationships were hiding a bank or credit card account from their partner. That’s about 29 million Americans! Considering trust is the single most important predictor of the success of a relationship, that means 1 in 5 people in this situation is putting their relationship at risk. This is not the route that you want to take.
Instead, it is best to get it all out in the open, rather than waiting until late in the game. Now I am not saying that you break out your credit history on the second date, but you do want to discuss your respective financial practices and backgrounds as your relationship gets more serious. If you have outstanding debts or past mistakes, share them with your partner. These factors will have an outsized impact on what you can achieve together, whether that is buying a house, raising children or traveling the world. Being honest and open about your finances will ensure there are no surprises later, and it will mean you and your sweetheart are more likely to stay together!
WHAT ADVICE DO YOU HAVE FOR THOSE WHO ARE READY TO TIE THE KNOT?
For those of you out there who are ready to get hitched, you want to develop a joint financial plan before the big day. This means taking the time to define your mutual money goals and outline your shared financial commitments. Both of you should be equals when it comes to your finances. Each person should be involved in money management, understand what decisions are being made, what your cash flow looks like, and the status of any financial accounts.
You should develop a joint budget and determine how each person will contribute to living expenses and other joint costs ahead of time. None of this is to say your finances have to be totally merged – in fact, it is important for each party to maintain a financial identity of their own – but you want to be on the same page when it comes to your shared money goals.
The other thing you must do before you tie the knot is to get everything in writing! We have all heard the stories: two people madly in love and convinced nothing will ever come between them, so they throw caution to the wind. Then something does happen, and money issues come to the fore.
While it may not be fun, or even feel optimistic, putting your financial agreements in writing is very important. Whether it is a prenuptial agreement which clearly specifies your respective assets or a living trust or will that determine what happens to your money in the event of a tragedy, you should handle this before you sign your wedding certificate.
ANY OTHER FINANCIAL TIPS FOR COUPLES?
Always remember to keep an open financial dialogue. Plan for hardship periods, especially if your family depends on two incomes. And work together to save for your future.
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