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The Impact That Financial Incompatibility Can Have in Your Romantic Relationships

Differentiating money habits may be more of a threat than you realize
Kathy Longo, CFP®, CAP®, CDFA® Monday, 11 May 2020

The Impact That Financial Incompatibility Can Have in Your Romantic Relationships

When you’re dating someone new, it’s easy to get caught up in the excitement of it all. The sparks are flying, you’re enjoying your time together, you seem to have a lot in common and you start thinking about whether it could become something serious. In scary times like these, you may be even more focused on your relationship than ever before. Though your new love may check all the proverbial boxes for your ideal mate, it’s important to ask yourself whether there are any financial red flags that could amount to deal-breakers for you. With social distancing laws in place, you and your partner can take advantage of your newfound free time by reflecting inwards on what you both want from each other when it comes to money values

Now, I know what you may be thinking: you should choose a mate based on love, not money… right? Well, the answer is more complicated than a simple yes or no. Let’s dig into the topic.

Understanding Financial Incompatibility

There are a plethora of issues that could lead to incompatibility between you and a romantic partner; one that you may not be taking seriously enough is financial attitudes. The reason that financial incompatibility can be so insidious is that it often reflects deeper fundamental differences between you. Attitudes towards money can reflect a person’s values, their goals for the future, their character, and their overall world view. Compounded with that, most people connect money with feelings of security, safety, and reassurance. Not entirely, but the chances are high that the character traits causing financial incompatibility in a relationship will manifest in other important ways as the relationship progresses. For example, if one partner is consistently making impulsive money decisions, they could show the same tendency for erratic or emotional behavior in other areas of their life, including in your relationship.

While opposites do sometimes attract and complement one another in relationships, exhibiting opposite attitudes about money brings a significant amount of risk into your relationship.

How Financial Incompatibility Impacts Relationships

While ultimately the success of a relationship is based on a variety of influences, study after study points to finances as the most significant influence when it comes to relationship success. In this article by the Institute for Divorce Financial Analytics, money issues were listed as the cause for 22% of divorces across North America. One of their analyst professionals was quoted saying, “Disparate goals and values around money coupled with the power and control financial prosperity represents makes money a common battleground in marriages.” The recent economic volatility and spike in unemployment shows us just how important it is to have a firm grasp on your finances. This is especially true if you and your partner have plans to have children or already do. When it comes to traversing through this journey we call life, it is beneficial to find someone who approaches money in the same ways you do. Above all, it’s crucial to find someone who is willing and able to talk openly and honestly about their money habits, goals, and values. Though it makes it harder, your relationship has a better chance of surviving some financial incompatibility if there’s a genuine and ongoing conversation happening.


SEE ALSO: To Merge or Not to Merge: Finances in a Second Marriage


Common Signs You’re in a Financially Incompatible Relationship

So now that you understand how dangerous conflicting money attitudes can be to your relationship, here are some signs that may point to incompatibility that you can look for:

o   The Saver/Spender See-Saw: When you think of your relationship, is one of you a spender and the other a saver? Are you constantly at odds about whether to go on that fancy vacation or set aside more for your nest egg? This type of imbalance is a fertile field for relationship stress and inconsistent financial planning. It’s not always a predictor of failure, but it absolutely means you and your partner need to prioritize talking about money and getting on the same page. Fortunately, with the lockdown, being shut in together provides the perfect opportunity for you to sit down and begin those conversations, make sure you’re on the same page for future goals, and minimize the negative influence of your differences.

o   Financial Infidelity: Have you ever hidden a purchase from your significant partner? Do you suspect they lied about the real price they paid for a particular item? Then your relationship has already experienced financial infidelity, defined by Wikipedia as “the act of spending money, possessing credit and credit cards, holding secret accounts or stashes of money, borrowing money, or otherwise incurring debt without the knowledge of one’s spouse, partner, or significant other.” According to an alarming study reported by CNBC, almost 41% of couples have hidden financial decisions from their partner with whom they share finances. There’s a multitude of ways that one can commit financial infidelity, but no matter how it’s done it is the underlying choice to deceive your partner that could be an alarming sign there’s something more insidious going on within the relationship. In a serious, long-term relationship, if you and your partner don’t feel comfortable and safe coming to each other to discuss your financial choices, it’s time to sit down and explore the reasons why.

o   Overwhelming Debt: Severe debt can be a sure-fire way to inadvertently end a relationship. Whether it’s just one half of the partnership, or it’s both of you together, owing a lot of money brings an inordinate amount of stress into a relationship that can be hard to overcome. The more your money goes to places outside of your own accounts the less cushion you have should something unexpected come up, like a global pandemic for instance. Plus, it takes away from opportunities to spend it on less stressful things that could add to your relationships such as dinner out or a trip to the movies. It’s always a good idea to be sure that you’re constantly checking in with your partner when adding collective or individual debt so that you can weigh the risks before making any major decisions.

There are obviously more signs of financial incompatibly, and it’s worth researching further if you suspect that you and your partner may not completely line up when it comes to money. Despite all of this though, the one thing that can help you two overcome any consequences resulting from financial differences is open, clear, and honest communication. With the backdrop of our country looking at a financial crisis, now is as good a time as any to start approaching these issues with your partner and assessing what work needs to be done, if any, to bring more financial harmony into your relationship. 

Is it a Good Idea to Have Financial Deal-Breakers?

Chances are you already have a few hardline rules for which types of romantic partners won’t work for you. For instance, if you love dogs and can’t live without them, you likely won’t date someone who doesn’t believe in having pets. If you don’t drink alcohol, you may not want to date a wine enthusiast. So, it follows that you could have meaningful financial deal-breakers, too.

Maybe you don’t want a partner who is a spend-thrift, or one who gambles. Conversely, maybe you enjoy the thrill of semi-risky business ventures and you don’t want a romantic partner who is ultra-conservative with their money. After witnessing the impact COVID-19 has had on the economy, maybe you’re realizing that financial conservatism is something you want in your life partner. Regardless of the details, the point is that it makes perfect sense to be watchful of your significant other’s financial habits. It’s not materialistic or selfish to do so. Rather, it protects your interests – financial and otherwise.

To be clear, having financial deal-breakers shouldn’t be about standards-based on salaries or net worth. Instead, it should be about the money values and habits that are important to you.

How to Build a Financially Sound Relationship

No relationship is perfect, but it makes sense to give some focus to financial issues since they can lead to so many problems. Building a healthy, financially sound relationship means talking about money honestly and often enough to learn one another’s values and habits. Specifically, it’s important to address how you both feel about saving, spending, and investing.

These conversations can be uncomfortable, and it’s rare to find someone whose financial outlook matches your own completely, but simply talking through issues is the best way to know where you both stand – and whether that financial foundation will support a healthy, balanced relationship. If your general money visions are at least within range of one another, or you have discussed your differences and set in place systems to work towards compatibility, and you both understand the importance of maintaining open and honest conversations, you’re well-positioned for success.

Final Thoughts

Deciding whether to have financial deal-breakers – and identifying what they are – is a personal decision. Nobody but you can decide what you’re willing to work with when it comes to your relationships. It’s also a very personal process to discover whether someone meets your financial criteria, as well as how long it may take to come to a conclusion about whether you may be financially incompatible. No matter what your current romantic situation might be, a silver lining that comes from this lockdown is that now is the perfect time for you to give some thought towards what your money values are, what your financial deal-breakers are, and if you’re in a relationship, begin having conversations about money with your partner.

As with many things in money and in love, it’s important to listen to your intuition. Know your own financial goals, embrace deal-breakers that feel right to you, and trust your gut as you move forward both personally and financially.

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About the Author

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.

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