Thursday, 7 May 2015
When deciding whether to commit to a romantic partner, you may consider the person's values, personality and even family background.
But you may have overlooked an equally important question: Are you financially compatible? "Couples have to a make a lot of financial decisions, buying a house, choosing investments and saving money — or for lower income levels, how to spend on a very tight budget," says Galena Rhoades, a University of Denver psychology professor who focuses on romantic relationships.
When asked to describe their ideal mates, people tend to visualize someone with similar financial habits and attitudes. But studies show reality is quite different.
"You are likely to attract the person who is your financial opposite," says Jacquette Timmons, financial behaviorist and the author of Financial Intimacy. "If you're a saver, you're likely to attract a spender and vice versa. If you find someone who is similar to you, one of you will scale back."
Given that money is the top cause of fights in marriage, this might be a cause for concern for people looking to make a romantic commitment. But even if you and your partner have completely different approaches to earning, saving and spending, you can make the relationship work. Here's how.
Being financially compatible with someone isn't about having the same money habits and attitudes but about being able to communicate openly about money. "What's most important is that a couple can find ways to make compromises and decisions together," says Rhoades.
Subconsciously, from the moment you go on your first date, you're likely assessing your partner's financial decisions, says Timmons — who paid for what, how the other person ordered, whether he or she offered or accepted a treat.
As the relationship progresses, you'll begin talking even more about your financial decisions. But don't turn discussions about money into interrogations. "The idea of going deeper shouldn't be me saying, 'What's your credit score?' or 'How much debt do you have?' More, 'I was looking at my finances the other day, and just wanted to share with you some stuff,' and let that be an opening for a conversation around money," says Timmons. "Never ask a question you're not willing to answer."
"A vacation would give you a lot of issues to react to and talk through together," says Rhoades. Everything from seeing what kind of lodging your partner prefers, to how he or she budgets for the trip, to how he or she tips the bellhop will give you more insight and fodder for conversation.
If you see something you don't like, first ask yourself if this is triggered by your history. It may remind you of how someone in your past behaved or treated you, but the motivation might be different. Then, try to understand why he made that decision. Plan a time to talk about it and give him advance notice, so he isn't blindsided by your questions. When you broach the subject, explain how your own experience might have prompted your reaction, and express curiosity about his choice.
"Don't make people feel bad for who they are because otherwise, they'll shut down," says Timmons.
Though in most cases differences can be worked through, some cannot — with financial lies being the top dealbreaker. Another is people who don't have a financial vision for their life, such as those who are unable to keep a job and have no realistic plan for making a living, or people deep in debt with no strategy for getting out of it. While they may otherwise be lovable people, unfortunately, their poor financial decisions and credit could adversely affect you.
If the openness around money has continued, over time you should find out more about your partner's financial life. In case you don't get to turn over every stone, before a major commitment like marriage, find out how much debt and savings your partner has (including retirement assets), how much she earns, her credit score, her investing philosophy and what her financial goals are. In the case of marriage, discuss whether or not to get a prenuptial agreement and whether and how to combine finances .
If you decide to live together before marriage, beware "it can lead to a lot of commingling of finances that can be difficult to untangle if the relationship ends," says Rhoades. "And there's not really the same legal support for disentangling the financial component of a cohabiting relationship."
If you decide to blend your financial lives, "Focus more time on strengths and not beating each other up on weaknesses," says Timmons. "If one of you is really good at detail, like paying bills on time, then you should be tasked with that responsibility." But, as always, even as you divvy up tasks, make sure the lines of communication stay open and other person is informed.
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