Money Matters In Relationships: The Importance Of Financial Compatibility
Financial wellness can be a crucial component of relationship functioning, providing numerous potential benefits to couples and helping avoid a common source of tension. Financial compatibility can help partners make money decisions together, set achievable goals, and better navigate their financial journey. But how do couples get on the same page when it comes to finances? Here, we’re discussing the importance of financial compatibility and sharing tips to help you and your partner ensure you’re aligned on money matters.
Exploring financial compatibility
Money is an ever-present factor in our day-to-day lives—meaning it also plays a significant role in our relationships. Proper money management can be key to a couple’s ability to plan for the future, achieve their goals, and enjoy life. For example, couples who want to have children may have to plan for extra expenses, save for college tuition, and navigate changes to income.
Financial compatibility refers to how aligned partners are when it comes to their attitudes toward finances, approaches to managing money, and financial goals. Financial compatibility can help you and your significant other build trust, address potential challenges, and deepen your connection. There are several signs that may indicate that you and your partner are financially compatible, including the following:
- Frequent discussions about money
- Similar attitudes toward saving
- Alignment regarding debt management
- Similar approaches to investing
- Clearly defined financial objectives
How money matters can impact a relationship
Money can be a sensitive topic and a significant source of tension for couples. Research suggests that 40% of relationship conflict is related to finances. Money matters can put pressure on a relationship, potentially affecting a couple’s emotional well-being, ability to foster trust, and overall compatibility. These concerns can be compounded when partners do not have honest or frequent conversations about their financial situation. The following are some of the most common ways financial challenges can impact relationships.
Lack of trust
Often, financial incompatibility arises out of one partner’s lack of forthrightness regarding their money challenges. Hiding a debt, loss of income, overspending, or other financial obstacles represents a breach of trust for many partners. Dishonesty can affect other areas of a couple’s life as well, potentially leading to resentment and overall mistrust.
Mental health challenges related to finances
Economic hardship can lead to emotional distress and can also cause or exacerbate symptoms of various psychiatric conditions. Research suggests that financial challenges are associated with anxiety, depression, stress, and other mental health concerns. These concerns can lead to increased tension in a relationship and further complications.
Concerns about earning disparities
Often, one partner in a relationship will earn more than the other. In these situations, some partners may struggle with feelings of envy, resentment, or embarrassment. For example, a person whose spouse earns significantly more than they do might feel that they aren’t contributing enough in the relationship, even if their partner doesn’t have a problem with how things are and the person contributes in other ways.
How to foster financial compatibility
Financial incompatibility can present serious obstacles in a relationship, so ensuring you're aligned with your partner when it comes to money can be important. There are several ways couples may be able to work toward increased financial compatibility, including the following.
Meet with a wealth management professional or other advisor
If you’d like help navigating your specific financial situation, consider working with a financial advisor or other financial management expert. A wealth manager may help you and your partner assess your financial situation, establish objectives, and work through money concerns.
Financial advisors can help you create a cohesive strategy, despite having divergent money management styles. For example, if one of you prefers a longer-term, risk-averse investment strategy and the other prefers a shorter-term, risk-tolerant approach, a money manager may help you develop a portfolio that blends these methods.
Focus on financial literacy
Learning more about money management can be an engaging way of cultivating financial compatibility. You and your partner can read books, watch videos, or attend workshops or classes on financial topics together. This may help you find common ground when it comes to saving, investing, managing debt, and making other financial decisions.
Regularly set aside time for talking about money matters
Discussing your finances with your partner can be key as you focus on saving money, paying down debt, and/or building wealth. During financial conversations, you and your partner can go over the balances of your bank accounts, review how much debt you have, trace where your money has been going, and discuss how much you’re going to spend in the near future.
Open communication and financial health: The importance of talking about money
Openness and honesty are typically crucial for couples seeking to foster financial compatibility. Regularly communicating with your significant other can allow you to assess your economic situation, identify potential areas of concern, and take steps toward financial wellness. It’s advisable to talk to your partner about your financial health, including your income, how much debt you have, the amount of money you’ve saved, and what your regular expenses are.
How to start a conversation about financial compatibility
You can also ask your partner questions about their financial health, attitudes toward money, and goals for the future. The following are some questions to consider asking during financial conversations:
- What is your income before taxes?
- How much do you pay in taxes?
- What are your primary monthly expenses?
- How much of your income do you put into savings?
- Do you have any significant upcoming expenditures?
- What is your attitude toward investing? Do you prefer an aggressive or conservative approach?
- Where do you keep your money?
- Do you have savings?
- How do you like to spend disposable income?
- Do you want to combine our finances? How?
Remember that such conversations can be difficult for many people, but that they may get easier when you engage in them regularly. It can also help to schedule these talks ahead of time, instead of starting them abruptly or only when conflict arises.
Tips for saving money and building wealth
A key tip often shared by financial experts is that households should generally aim to spend less than they earn, when possible. While a person’s money situation can also be affected by factors out of their control, such as inflation and systemic barriers, the following strategies may still be helpful for practicing financial wellness.
Make a budget
An account of your shared monthly earnings and expenses can help you and your partner discuss money regularly, set financial expectations, and avoid overspending. Budgets can be done on a spreadsheet or in an app, and they set out recurring income and expenses to help you understand your monthly financial situation at a glance.
To start a simple budget, you might list the various forms of monthly income you and your partner earn. Then, list your fixed monthly expenses, such as a mortgage (or rent) payment, insurance premiums, phone bills, etc. For your variable monthly expenses—such as your utility bills, food costs, and home maintenance expenditures—you can estimate using a rough average of past amounts (e.g., an electric bill that is usually between $150 and $200 may be averaged out to $175). You can also create categories for saving, investing, and discretionary spending so that all of the incoming money is accounted for and the budget is balanced.
Budgeting allows you to ensure your money is being allocated as efficiently as possible. A financial advisor can help you and your partner develop a budget that works for you.
Start saving for the future
Whether you create a retirement account or save for another financial goal, putting aside money early in life can help you and your partner set yourselves up for success down the line. Regularly allocating a certain amount of money to an interest-earning account, for example, allows you and your partner to take advantage of compound interest.
Cut down on unnecessary expenses
Subscriptions to streaming services, meals at restaurants, luxury goods, and other non-essential expenditures can add strain to a couple’s financial life. Consider reviewing your expenses with your partner and looking for places where you might be able to cut down and save money.
Cook your own meals
Food expenses likely comprise a significant portion of your budget, and these expenditures can be even greater if you’re dining out frequently or ordering food from delivery services regularly. Home-cooked meals can be significantly less expensive than restaurant meals, so it can be helpful to make food at home as often as you can.
Consider developing a weekly meal plan with your partner so that you know what you’ll be eating for breakfast, lunch, and dinner most days. You can also prep your meals at the beginning of each week, which can save you time and help you avoid impulse spending on food.
Sell clothes or other possessions
One way of raising extra money is by getting rid of clothes, jewelry, electronics, appliances, or other possessions you no longer want or need. You could consider posting your goods on online auction sites or taking them to local retailers who buy items.
Discussing finances with your partner in online therapy
If you’re looking for a forum to discuss your finances with your partner and foster financial compatibility, consider online therapy. An experienced, qualified online therapist may help you and your partner address money-related stress and get on the same page regarding your financial future.
How online therapy can help promote open communication regarding money
With an online therapy platform like BetterHelp for individuals or ReGain for couples, you can work through finance-related mental health challenges with a qualified professional remotely, through video call, voice call, or in-app messaging. Online therapy can also be a more economical option than traditional in-person support, with BetterHelp memberships starting at $65 per week, billed every four weeks. Cost is based on factors such as your location, referral source, preferences, therapist availability and any applicable discounts or promotions that might apply.
Research on the effectiveness of online therapy
Studies indicate that online therapy may help individuals manage mental health challenges associated with financial concerns. For example, in a study on the efficacy of online therapy for participants with finance-related stress, researchers concluded that such an intervention may help “promote effective financial behaviors and improve financial and global psychosocial well-being.” These results can be added to those of numerous studies that suggest the efficacy and affordability of online therapy programs in general.
Takeaway
Financial compatibility can play a key role in relationship satisfaction, potentially helping partners plan for the future, deepen their connection, and reduce the risk of certain mental health challenges. Cultivating financial compatibility typically involves communicating openly, establishing shared goals, and developing healthy financial habits. If you’d like help addressing financial challenges, consider connecting with a licensed therapist. With the support of a mental health professional, you may be able to foster both financial and emotional wellness.
How can you check financial compatibility?
Financial compatibility in a healthy relationship depends on the standards of each individual in the relationship. Some people may not mind if their partner’s credit score is poor or if they have different spending habits. However, if you’re looking to marry someone and establish a long-term financially compatible relationship, you may worry if your partner’s financial issues could potentially impact you or other areas of your life. You can discuss whether your partner is financially compatible with you by having an open conversation with them about your expectations and deal breakers in a relationship. You can then decide how you and your partner will explore financial matters with each other moving forward and determine whether you want to continue the relationship.
How can you tell if someone is financially stable?
Financial stability generally involves healthy financial approaches, an average to high credit score, efforts to pay off debt, and making financial health one of your priorities. Financially healthy people may not necessarily be rich or own a business but may talk about their finances openly and make careful decisions instead of impulsive and large purchases. They may put time and finances into investing, retirement plans, and other security plans for their future.
When should you talk about money when dating?
You might decide to talk about money when dating someone if you plan to live together. You may talk about the other’s credit score, sense of security, and whether you gain the same amount of money or have different income levels. If you plan to live with someone, talking about money beforehand can be helpful, as you may want to discuss how you’ll split the bills and how much money you want to budget for each life expense, such as food, utilities, and entertainment. Some people may value spending money on experiences more than saving for the future, whereas others may be more careful about their financial choices. If you’re incompatible in how you spend money, you might have disagreements in the future, so opening up about them now can help you prepare and build healthy communication skills.
Should you date someone who is not financially stable?
It is your choice to date someone who might not be financially stable. Many people have relationships with others who are financially unstable. In some cases, financial challenges like low credit or a lack of income are due to external forces, such as traumatic events, which may have been beyond the person’s control. For example, when people become homeless beyond their control, they might have to take out loans or credit cards to keep themselves alive, which can lead to debt they struggle to pay back and low credit. In addition, some financially insecure people might not have much social support or family in their lives to help them, so they might not know how to make positive decisions in young adulthood. Being empathetic to other people’s situations can help you understand why they might be struggling now. A supportive, loving partner can help people make more positive choices and believe in themselves, especially if they don’t have that support elsewhere.
How do you know if someone is struggling financially?
You might not be able to tell if someone is having financial challenges. People often experience shame surrounding their finances because of the shame that is put on people with a low income or financial difficulties. You can ask openly to learn more about someone’s situation. However, making assumptions based on someone’s clothes, car, or appearance can be harmful.
What are the financial red flags in a relationship?
Financial red flags might look like the following:
- Not paying rent or bills when living together in a home and previously having agreed to split the bills
- Frequently overspending money on wants instead of paying for necessities
- One partner gives more than the other financially when the other is also capable
- One partner using their partner’s credit cards or good credit to put them in debt
- Financial abuse–controlling and possessive behaviors involving money
- One partner controlling the other person’s spending even though they have not agreed or do not want to be controlled
- Secretly borrowing money frequently from their partner’s family and friends
- Refusing to have open conversations about finances, especially if you’re married or live together
- Spending the other partner’s money without their permission
Should you go 50-50 in a relationship financially?
Going 50-50 financially is a choice many couples make to remain fair in their relationships. You do not have to make this choice if it doesn’t make sense for your relationship. For example, in some relationships, one person makes most of the money. The other contributes to the relationship in other ways, such as through household chores and supporting the organization of documents and processes in their lives. You can come up with a system that works for you and your partner. Try to avoid gender role stereotypes. Many couples are made up of two men and two women, and there is no one way that a man should act. Men do not need to be breadwinners, and women do not need to be housekeepers, especially if one or both partners are not happy with this dynamic.
What age should a man be financially stable?
Financial stability comes at different ages for different people, and a series of life events can lead to someone not being financially stable early in life, which may not be fully in their control. However, people often become more financially stable as they reach their 30s.
How many couples break up because of financial problems?
27% of Americans report breaking up due to financial challenges. Financial challenges may be more of a challenge for married couples, with four in ten couples reporting a divorce based on finances (40%).
How much should a wife contribute financially?
There are no rules on how much someone should earn or contribute to a relationship based on gender. Women can work full-time jobs and contribute 50% or up to 100% of the bills in a relationship. How much someone contributes is up to them and their partner. Try to have a conversation about your desires for the relationship and whether your expectations are compatible. Remember that many relationships comprise two women, and in these relationships, gender roles might not be discussed as often. If you’re a woman in a relationship with a man, don’t push yourself to work less or more because of his desires. Try to maintain self-respect when talking about financial expectations.
How important is financial compatibility?
Financial compatibility can be important to many people, but some people don’t mind. If finances are important to you, let potential partners know as soon as possible, especially if you think you’ll want to build a long-term, serious relationship.
Is money a deal breaker in relationships?
For some people, money is a deal-breaker. Talk to your partner about their deal breakers when you’re considering a serious relationship to avoid conflict down the line. You might also consider having these conversations with a counselor present, as they can act as a neutral third party.
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