Do you know someone that is about to get engaged or married? Have they discussed their financial beliefs? Of course religious and political views are important when entering into a long term relationship, but for some reason financial beliefs are often overlooked. We might get the feeling that our partner is frivolous with money, but we just assume that once you get married that all of your financial decisions will be discussed and agreed upon together. Or, perhaps you decide not to worry about the differences in financial beliefs because you plan on keeping your accounts separate – but what happens when you near retirement and your spouse has nothing saved? Are you going to say, “Tough luck, have fun eating spam for the next 20 years”?
A Few Personal Stories
I have a friend that completely impressed me in his most recent relationship. He and his long time girlfriend were very compatible in almost every way, but he was brought up in a saver household and she was very much involved in a family of spenders. While she said all the right things when it came to money beliefs, she suddenly went out an bought a brand new car on payments, which was a cost well beyond what my friend considered reasonable. This was not the first time that she was financially irresponsible, so my friend called it quits. If they could not agree on spending now, then they obviously wouldn’t be able to make it work in the future.
I wish I was half as smart as my friend in this category. Unfortunately, I was blinded by love, assuming that everything would work out for the better in the end. Let’s just make a long story short say it didn’t. My finances suffered during the relationship and they were even impacted after it died due to the divorce agreement. I would have done myself a huge favor had I just stepped back and evaluated the financial differences between my significant other and myself.
Evaluate Your Differences
Before you enter that long-term relationship it might be wise to think a little more deeply about the areas below:
1) Delayed Gratification – Do you and your special someone delay your gratification? In other words, you might have something that you want to buy (like a new TV). When you start thinking about this new product, do you or your friend (we’ll just keep saying friend…it’s easier that way) want to head out immediately and buy it? Or, do you start to plan how to get the best deal on this product and wait until you actually need it?
2) Saving – An easy way to decipher whether or not you or your friend are savers is to check your bank accounts. How much money do you have? If each of you have over $5,000 in your accounts, then it’s pretty safe to say that you’re both savers. If neither of you can find a comma, then I would say that you’re both savers.
3) Is Stuff Important? – Do you have a lot of stuff? Do you value it greatly? What about your friend? If one of you is all about keeping up with the Joneses and the other is not, then you are most likely on the path to serious problems.
4) Budgeting – This is often a swear word in many people’s mind, but it is incredibly important in relationship. If both of you can agree on a budget, then money fights shouldn’t really happen. If the budget didn’t have a new TV in there, then it’s pretty simple, you shouldn’t buy that new TV. If you can budget together, then life should be much more simple.
5) Long-Term Goals – If one of you wants to put $300 a month away for retirement and the other wants to put nothing away (but yet, still has dreams of living in that house on the lake), then things will be pretty tense in your house. Both of you should be realistic in your long-term goals, and you should also make logical financial decisions today in order to achieve them.
What are your thoughts about finances and relationships? I would love to hear them!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.