The money talk is an important part of any serious, long-term relationship. How much do you know about your partner’s finances?
As Valentine’s Day approaches, many of us think about where we are at with our relationships. Married and long-term committed couples evaluate their long-term commitment and (hopefully) reaffirm their love. New couples try to assess exactly where they stand. And couples trying to figure out if they are ready to move to the next level try to determine what that next level will be.
For many couples trying to figure out what’s next, a discussion of a partner’s finances becomes very important. This year, as I observe my first Valentine’s Day as a single person in 13 years, I think a lot about what my ex and I probably should have done when it comes to money. One of those things was talk more about it.
When Do You Start Talking About a Potential Partner’s Finances?
Having the money talk can be awkward. And it may not even be necessary if you are just starting a relationship. In fact, according to a survey from Discover, most consumers feel that a relationship should be more about fun and adventure, and less about financial stability at the outset.
You can get a general idea of how someone manages their money throughout the early stages of the relationship – at least once you’re both done trying to impress each other. (According to the Discover survey, Millennials are likely to spend $185 for Valentine’s Day, while Baby Boomers are likely to spend $70.)
Pay attention to how your new flame talks about money, and whether s/he is thoughtful when spending money. You can get a feel for money priorities just by hanging around in many cases.
At some point, though, you do need to sit down and have a serious talk about finances. Since the recession, with so many Millennials waiting to marry until they have a career (and their own money), and with Gen Xers divorcing and starting new relationships, it’s no surprise that good credit and other good financial habits are becoming more important. While you might not care when you start getting to know someone, it might matter more later.
When you start getting serious, that’s the time to ask about your partner’s finances – and be ready to share information about your own situation. As you prepare for “the talk,” make sure that you know the following about your own finances:
- Your credit score: Know where you stand. You can get your FICO® Credit Score for free with your monthly statement when you have the Discover it®
- Debt level: How much debt do you have, and what kind of debt do you have? It’s one thing to have student loans and quite another to be loaded down with high interest credit card debt. If you are looking for a way to consolidate debt, Discover offers 0% intro APR for 12 months on purchases and balance transfers with a 3% balance transfer fee.
- Assets: What types of assets do you have? A retirement account? Savings? You don’t need to share all of this information with your potential partner, but you should know where you stand, and what you can contribute.
- Income: What’s your income? You and your partner should have a plan for paying bills and dividing other expenses. You can’t make a good plan without knowing what the other makes, and having a plan to determine what’s fair for each of you to contribute.
- Spending priorities: Think about your spending priorities. What matters to you? One of the issues that plagued my marriage was the fact that I love experiences and travel, while my ex loves things. He always wanted the big TV, the expensive action figures, and the newest game console, while I wanted to go on a trip. Neither of is was “more right” than the other; we just have different priorities. But things would have been a lot different if we had acknowledged this and discussed it prior to tying the knot.
These are items you need to know about your own finances going in, and you need to know them about your partner’s finances. Talk about what matters to you, and be honest about where you stand. Once you both have all the information you need, you can make more informed decisions about how much you want to remain together – and what kinds of joint and separate financial steps you need to take in order to make it happen.
Disclosure: This blog post was written as part of a sponsored program for Discover Financial Services. All views expressed are entirely my own, and were not influenced or directed by Discover Financial Services.