Thinking about moving in together with your partner or proposing? Don’t make a big move without first being bold about your financial needs and goals.
In a survey published in February by Bread Financial, 64% of coupled consumers said they were financially incompatible with their partners due to differing approaches to money.
When it comes to what’s financially attractive, single respondents said paying bills on time and having a financial planner.
Additionally, a January survey from financial services company Western & Southern Financial Group found that one-in-three couples waited until after marriage to talk about finances. Salary was the biggest topic they wished they’d talked about sooner. Respondents said they wanted their partners to be making a salary of about $30,000 at minimum.
One of the biggest relationship deal breakers was having personal debt.
Financial activist Dasha Kennedy — also known as The Broke Black Girl — says couples should be having conversations about money as early as the very first date.
Here’s why it’s important to figure out if you’re a financial match before things get serious.
Why it’s important to have the money talk
Kennedy, who has worked as an accountant and loan default counselor, divorced her husband after realizing they weren’t financially compatible. The divorce left her $25,000 in debt and took her five years to financially recover from.
“Had we initiated more financial conversations in the beginning, we probably would have either decided early on that we were just not financially compatible to be in a relationship, let alone to be married,” Kennedy told Moneywise in an interview late last year.
“When we look at the data, we see that not talking about money or money-related issues is one of the leading causes for divorce.”
Forbes recently reported that 38% of divorced couples cited financial problems as the reason for their divorce.
Kenndy added that “initiating those conversations as early as possible and trying to get ahead of that curve is very important.”
She and her ex rarely spoke about money over the duration of their relationship and they always dealt with their finances separately. While Kennedy was concerned about long-term financial goals, her ex typically focused on the present.
For example, once she’d suggested they might buy life insurance to ensure they could always provide for their children. But her ex didn’t see the point of preparing for something that “may not happen.”
“I didn’t feel that … I would be able to stand my ground and be confident in what I knew about money and speak my piece,” Kennedy said. “So I didn’t initiate any conversations.”
After the divorce, Kennedy says her financial responsibilities doubled while the household income was slashed in half — on top of the $25,000 in debt she had to pay. She made it work, but it was tough: she downsized her apartment, took public transit instead of buying a car and bartered for services like child care.
How to talk about money
You don’t necessarily need to ask a potential partner about their salary or what their credit score is on the very first date, but you can bring up more general topics around money, Kennedy says.
You want to get a sense of how someone views money rather than their habits, which don’t matter as much when you’re still getting to know someone. She suggests asking dates about their relationship with money and just seeing if they’re open to having conversations about it.
“In so many ways, money exists from the very beginning,” Kennedy said. This includes deciding where to go on your first date to splitting the bill. Financial decisions exist from the very beginning.
Once you’re further into a relationship, you can start asking more serious questions.
Read more: UBS says 61% of millionaire collectors allocate up to 30% of their overall portfolio to this exclusive asset class
“Along with discussing upbringing, couples should discuss financial goals, financial planning, accepting each other’s financial differences, different money management practices that are fair, and creating financial boundaries,” Kennedy said.
Some people may be eager to discuss money immediately, but others may need a little more time to engage. While discussing finances can lead to better results in the long run, it can also cause more friction if it’s not handled well. Bread Financial’s survey revealed that among millennials, the age demographic that discusses finances the most, there were more arguments about finances. In contrast, baby boomers discussed finances the least and argued about them the least.
Kennedy says it’s keys to approach the topic of finances with your partner with empathy and an open mind.
“Give your partner time to show up,” she advised. “We all come from different backgrounds, different beliefs, we all have different experiences when it comes to money.”
Watch out for these red flags
It’s possible for a relationship to work if each partner has different philosophies with regards to money, but don’t be afraid to set firm boundaries. Kennedy warns you should be suspicious if your partner suddenly needs to borrow money or if they have a tendency to hide important financial details.
Lying about your finances or hiding parts of it, such as a credit card balance, is sometimes called “financial infedility.” According to the Bread Financial survey, this appears to be more common among millennials and Gen Z, where 61% and 60%, respectively, admit to not sharing a key financial fact with their partners. Older generations aren’t quite off the hook, though, since 30% of men (overall) admit to hiding a credit card balance from their partner, along with 19% of women.
Red flags such as financial infidelity can be especially concerning if it seems like your partner is trying to live beyond their means.
For example, there is research that shows that act of dating itself is causing some Americans — namely millennials — to fall into debt. According to a LendingTree study, almost a quarter of millennials have gone into debt to pay for their dating habits and 10% have had a credit card decline while on a date.
Kennedy says that it’s important to be mindful of the current economic climate when considering a person’s financial situation. For example, living with parents or not owning a car aren’t necessarily indicators of financial instability these days. In fact, young adults in the U.S. are more likely to live in a multigenerational home now than 50 years ago, according to Pew Research Center.
But if your financial aspirations and behaviors are completely out of sync with your partner, you may want to consider the difficult decision of ending the relationship.
“It is essential to know that some financial goals and habits can be seen as deal breakers, which is OK,” Kennedy said. “You and your partner will not always agree on everything, but that doesn’t mean you have to conform to values that go against your financial morals.”
What to read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.