Before making a lifelong commitment, we determine our compatibility with a potential mate by vetting their personality, intelligence, moral compass, family, and career. Do we like the same movies? The same food? Do they like to travel? Are they honest? But sometimes, we overlook a vital component: their financial stability and spending mindset.
Social norms prevent us from evaluating a significant other’s finances. Inquiring about money or financial well-being is considered a faux pas. We cringe at asking about a partner’s income, debt, or credit score for fear of coming across as shallow or materialistic. In traditional wedding vows, we promise to persist “for richer, for poorer” because love is supposed to conquer all.
In reality, one of the biggest reasons relationships fail is due to finances. So, before you commit to spending the rest of your life with someone, you better make sure that your financial goals align. Take the time to discuss finances openly with your partner and ask these questions to gain insight into your financial compatibility before it is too late.
What Are Your Long-Term Financial Goals?
Discussing long-term financial goals is crucial because you want to ensure that you are heading in the same direction. For example, do they share your goal of purchasing a home? Or do they aspire to live in an apartment with two kids and three dogs and spend their money on traveling? These are fundamental personality differences, and they can break a relationship.
What Is Your Debt-To-Income Ratio?
Your debt-to-income ratio (DTI) is your total monthly debt payments divided by your gross monthly income. An individual’s debt should be no greater than 43% of their income. A ratio greater than 43% signals that someone does not make enough to cover their payments and is heading for bankruptcy. Not only does this mean they will have difficulty paying their bills, but they will also have difficulty obtaining credit. Most creditors will not lend money to people with a DTI higher than 43%, which can impede buying a home, car, or other large assets.
What Is Your Credit Score?
Learning someone’s DTI doesn’t give you the complete picture. You should know their credit score, which provides even greater insight into their financial habits. A low credit score often suggests past difficulties with making timely payments. It can also indicate serious financial issues like foreclosures or bankruptcy. Further, it reflects their character and creditworthiness; in other words, whether they make good on their word to pay back loans. A low credit score not only can prevent you from getting a home or car loan, but it can also impact your ability to rent an apartment, get a job, or qualify for a low-interest rate on future purchases.
What Does Your Budget Look Like?
Knowing your partner’s budget helps you assess your financial compatibility as a couple. It lets you determine if your financial goals, spending habits, and saving priorities align. If one person has the “YOLO” mentality and spends their money as quickly as they make it while the other has a budget-conscious attitude, this relationship is doomed. These differences place constant stress on a relationship and cause daily disagreements that erode a marriage.
How Will We Manage Our Finances?
It is important to talk about financial responsibilities and expectations with your future mate. With this question, you want to learn whether you will have a joint account, a separate account, or both. If one person assumes you will combine your money and the other wants separate finances, you will have issues. You also want to learn who pays for what and how much. If one spouse makes significantly more than the other, are bills split proportional to income? Or do you expect that cost to be shared 50/50, no matter what? Each person’s financial contribution to the household should be determined before marriage, or even cohabitation, to avoid any surprises that could threaten your financial stability.
What Is Your Philosophy On Financially Assisting Children?
Do we give them an allowance? Do we require them to work? Do we pay for their college? This information is vital because it ensures that you are on the same page and can make informed decisions regarding financial support for your children. Figuring this out before you have children establishes a consistent and unified front, which is essential for maintaining a fair and balanced approach to their financial upbringing. It helps you make decisions about saving for their education, teaching them about responsible money management, and instilling good financial habits.
Will We Have To Support Anyone Else?
This question is important because you learn the other’s values and priorities regarding giving financial support to extended family. The last thing you want is to be surprised ten years into the marriage when your spouse is willing to financially support a family member, and you are vehemently against it. You should consider financial capacity, cultural expectations, and the circumstances in which both individuals would be comfortable extending financial support.
Having open and honest conversations about finances with your partner is crucial before making a long-term commitment. Identifying financial red flags can help you make informed decisions about your future together and prevent major relationship-ending problems. After all, there is no romance without finance.
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