Are you financially compatible with your mate? Here are 5 ways to find out.
It may not be the most romantic pre-Valentine’s activity, but it could prevent disaster down the road.
Love is in the air. With Valentine’s Day around the corner, many are ordering flowers and heading to the chocolate shop.
Yes, everything is all roses until money tiffs surface. For Tom and Ariana Sylvester, both 33-year-old entrepreneurs from Rochester, N.Y., it was right after graduating college in August 2007.
Having watched his mom struggle to support him and his two siblings after a divorce, Tom was determined to become an entrepreneur. Ariana was raised as an only child in an upper-middle-class home, so she thought they should save and work.
“Eventually, I felt like I had no choice and spent $7,500 on a set of four real estate investment trainings,” Tom says. This was nine months before their wedding, and he did so without checking with Ariana.
That was a tipping point for the young lovers. “It forced us to sit down and discuss how we make and spend our money and what we wanted in the future,” Ariana says. Now they meet monthly with a spreadsheet showing their income, debt, savings and monthly bills. It has helped them to stop overspending and focus on eliminating debt.
According to new data from Fidelity Investments, outside of an emotional connection, financial stability is the second-highest consideration when beginning a new relationship for women (64%), while men valued physical attraction (60%).
Money is one of the top reasons marriages end, according to research cited in Psychology Today. When two people come together, they need to make sure they are financially compatible.
Here’s how to determine if you and your betrothed are a good fit — financially speaking.
1. Define your values
Often, financial disagreements are not simply about money, says financial adviser Libby Muldowney at Savant Capital Management in Rockford, Ill. “Money can represent power, self-worth or control to people,” Muldowney explains. “Creating a life as a couple built on common values will help you use the money as a tool to support those share values and financial habits.”
2. Review your saving and spending habits
Kevin Brauer, CFO of Affinity Federal Credit Union in Basking Ridge, N.J., says you have to take a close look at each other’s money habits. “Is your mate into high-end clothing and cars?” Brauer asks. “Ask yourself: Is he or she willing to go into major debt to maintain a certain lifestyle while sacrificing the basic necessities?” If these priorities don’t match your own, think twice, he says.
3. Look at each other’s credit scores
Anyone can experience financial difficulties at one point or another. “However, a high number of delinquencies and collections are an indication of irresponsibility,” says Roslyn Lash, an accredited financial counselor in Winston-Salem, N.C. For a free report, go to myfico.com.
4. Take a closer look at your mate’s parents
While not always the case, the spending habits of your mate may be similar to his or her parents’ patterns, says Thomas J. Henske, a financial adviser at Lennox Advisors in New York. “Are the parents big spenders? Or, do you have a sense that they may need financial assistance in the future?” he says. “There may also be undue pressures to live a lifestyle in excess of your income to keep them in the lifestyle they are accustomed to. It’s sad but true.”
5. Be transparent about money
Being financially transparent early on lessens emotional and economic stress. “Don’t be afraid to share if you are in debt, your approximate take-home pay, what you like to spend your money on or how much you try to save,” says Michael Tanney, co-founder of Wanderlust Wealth Management in New York. “If you are looking at your relationship as a long-term investment and don’t know each other’s balance sheet, you’re gambling, not investing.”
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