A salary below this amount is a red flag for many Americans – how to avoid being among the 64% who say they are “financially incompatible” with their partner
Are you considering moving in with your partner or proposing? Don’t take a big step 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 because of different approaches to money.
When it comes to financially attractive, single respondents said they pay their bills on time and have a financial planner.
What’s more, a January survey by financial services firm Western & Southern Financial Group found that one in three couples wait until after marriage to talk about finances. Salary was the most important topic they wished they had talked about earlier. Respondents said they wanted their partners to earn a salary of around $30,000 at a 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 have conversations about money from the very first date.
Here’s why it’s important to figure out if you’re financially compatible before things get serious.
Why it’s important that money talks
Kennedy, who worked as an accountant and default counsellor, divorced her husband after realizing they were not financially compatible. The divorce left him $25,000 in debt and took him five years to recover financially.
“If we had started more financial conversations early on, we probably would have decided early on that we just weren’t financially compatible to be in a relationship, let alone be married,” Kennedy told Moneywise in an interview. at the end of last year.
“When we look at the data, we find that not talking about money or money-related issues is one of the biggest causes of divorce.”
Forbes recently reported that 38% of divorced couples cited financial issues as the reason for their divorce.
Kenndy added that “it’s really important to start those conversations as early as possible and try to get ahead of that curve.”
She and her ex rarely talked about money throughout their relationship and they always handled their finances separately. While Kennedy was preoccupied with long-term financial goals, her ex usually focused on the present.
For example, once, she had suggested that they take out life insurance to ensure that they could always support their children. But her ex didn’t see the point in preparing for something that “may not happen.”
“I didn’t think…I would be able to hold on and be confident in what I knew about money and talking my bit,” Kennedy said. “So, I didn’t initiate any conversation.”
After the divorce, Kennedy says her financial responsibilities doubled while household income was cut in half – on top of the $25,000 in debt she had to pay off. She made it work, but it was hard: she downsized her apartment, took public transportation instead of buying a car, and traded in services like childcare.
how to talk about money
You don’t necessarily need to ask a potential partner what their salary is or what their credit score is on the very first date, but you can bring up more general topics about money, Kennedy says.
You want to get an idea of how someone thinks about money rather than their habits, which don’t matter as much when you’re getting to know someone. She suggests asking for dates about their relationship with money and just seeing if they’re willing to have conversations about it.
“In many ways, money has been around since the very beginning,” Kennedy said. This includes deciding where to go on your first date to split the bill. The financial decisions exist from the start.
Once you’re further into a relationship, you can start asking more serious questions.
Learn more: According to UBS, 61% of millionaire collectors allocate up to 30% of their overall portfolio to this exclusive asset class
“In addition to discussing education, couples should discuss financial goals, financial planning, accepting each other’s financial differences, different fair money management practices, and creating financial limitations,” 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 long-term results, it can also cause more friction if not handled well. Bread Financial’s survey found that among millennials, the age group that talks the most about finances, there were more arguments about finances. In contrast, baby boomers discussed finances the least and talked about it the least.
Kennedy says it’s essential to approach the subject of finances with your partner with empathy and an open mind.
“Give your partner time to introduce themselves,” she advised. “We all come from different backgrounds, different beliefs, we all have different experiences when it comes to money.”
Watch out for those red flags
A relationship can work if each partner has different money philosophies, but don’t be afraid to set firm boundaries. Kennedy warns that you should be wary if your partner suddenly needs to borrow money or tends to hide important financial details.
Lying about your finances or hiding parts of them, such as a credit card balance, is sometimes called “financial infidelity.” 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. However, older generations are not entirely immune, as 30% of men (in total) admit to hiding a credit card balance from their partner, along with 19% of women.
Red flags such as financial infidelity can be particularly concerning if it seems like your partner is trying to live beyond their means.
For example, there’s research that shows that dating someone themselves puts some Americans in debt — namely millennials. According to a study by LendingTree, nearly a quarter of millennials have gone into debt to pay for their dating habits and 10% have seen their credit card decline while on a date.
Kennedy says it’s important to be aware of the current economic climate when considering someone’s financial situation. For example, living with your parents or not owning a car are not necessarily indicators of financial instability these days. In fact, young adults in the United States are more likely to live in a multigenerational home today than 50 years ago, according to the Pew Research Center.
But if your financial aspirations and behaviors are completely out of step with your partner, you might want to consider the difficult decision to end the relationship.
“It’s critical to know that certain financial goals and habits can be considered deal breakers, which is normal,” Kennedy said. “You and your partner won’t always agree on everything, but that doesn’t mean you have to conform to values that go against your financial morals.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.