5 Financial Relationship Red Flags When it Comes to Money
Plus 5 tips to help get things back on track
By Monika Ritchie
We know that finances and relationship red flags may not seem like a very rose-coloured topic for Valentine’s Day. However, the fact remains, trying to manage your finances in tandem with another individual can put severe strain on your relationship. Whether you’re keeping the money separate or joining forces financially, having a plan in place and being aware of each other’s financial habits – the good, the bad, and the ugly – will go a long way to alleviating the strain on your relationship and your finances. Here are five financial red flags you should be aware of and some tips to deal with them.
Four Reasons Couples Clash Over Money
1. They Don’t Spend According to a Budget
Lately, more and more of us are having those difficult weeks or months when balancing the budget and making ends meet is especially challenging. But if your partner’s financial situation is consistently marked by some or all of the following issues, encourage them to reach out for help sooner rather than later. It will help minimize the damage to their financial situation, ease their stress, and improve their outlook on the future. These changes can help decrease tensions in your relationship and brighten your day-to-day interactions.
- They have a long-term relationship with their overdraft protection
- Their credit cards are maxed out
- They consistently have trouble meeting their financial obligations
- They’re trapped in a cycle of debt
- They’re living pay cheque to pay cheque
2. When it Comes to Talking About Money, Their Lips are Sealed
We know the ‘money talk’ isn’t exactly fun or romantic and if you’re struggling with debt, it can feel even more awkward. We don’t expect you to swap bank statements on the first date, but at some point, finances should be included with all your other crucial relationship discussions. It’s unlikely you’d seriously commit to someone without first ensuring that your plans are aligned on matters like housing/living arrangements, career paths, and family. Your financial habits, goals, and backgrounds are just as important to your future, and should be addressed before making a commitment.
All of those relationship decisions are significantly impacted by our financial situation, but few of us are as willing to talk about money as we are about where we want to live, or the future of our career. Awkward or not, open discussions about your finances are not only beneficial for your relationship, they’re also a good way to ensure that more severe issues or struggles don’t go unnoticed.
3. A ‘Money Talk’ Reminder Isn’t in Their Calendar Anytime Soon
Having the money talk on a regular basis is crucial. If your partner is someone who avoids the topic entirely and/or becomes agitated when it comes up, they might be struggling with a more serious issue – unpaid debts, a gambling addiction, etc. Having a set, recurring date for discussing money – e.g. the first Sunday of the month – can help both of you manage smaller issues before they become serious problems. It’s a great time to discuss goals and plans as well – weekend getaway, anyone? Making the financial conversation a regular part of your relationship routine also helps you avoid the conflict and tension that can arise with secret spending and unexpected financial “surprises.”
How to Make Joint Debts Work and Pay Them Off
4. The Spending Secrets are Stacking Up
You’ve likely heard the adage “if you have to keep it a secret it’s because you shouldn’t be doing it in the first place.” If one or both of you is displaying some of these secretive, spending tendencies, you’re risking a breakup with your budget and tension in the relationship:
- Spending unusually high amounts – especially when the other partner is not around
- Hiding purchases from the other person
- Throwing away receipts or omitting certain expenses on the budget
- Hiding the truth about how much debt they have
Tips to Avoid Impulse Spending
5. Their Debts are Putting Your Financial Future at Risk
We all want to help our loved ones, but if you’re putting your own financial future at risk to do so, you’re not doing them or yourself any favours. Helping people to your own detriment can be especially tricky if you’re dealing with income disparity or if one of you is a spender and the other is a saver. If you’re co-signing for loans, sharing credit cards, have a joint a car loan, etc., you need to be aware of your rights and responsibilities around joint debt. Keep in mind that if the other person doesn’t hold up their end of the bargain, you will still be responsible for the full amount of the debt. We all want to help our loved ones, but if it’s at the expense of your own financial security and mental health, consider finding another way to help besides a loan.
How to Financially Help a Friend — Without Going Broke
6. A Bonus Tip for Valentine’s Day, Don’t Let Romantic Overspending Overwhelm Your Budget
In the early days of a relationship, it can be far too easy to start overspending on those more frequent outings, special occasion gifts, and other incidentals. Those “small” expenses can add up fast. If you find yourself backsliding on your financial goals or starting to get a bit complacent about saving, it’s time to sit down, reassess, and track your spending. Remember to look for inexpensive ways to spend time together and try to set joint financial goals. Hopefully, you can start building positive financial habits together instead.
Avoid Relationship Deal Breakers – We Can Help Your Finances Flourish Instead of Flag
Relationships and finances can be challenging enough to sort out individually. Trying to address both at once can be a deal breaker when it’s all too easy to get emotional and overwhelmed with the situation and each other. Our credit counsellors and educators can provide objective and helpful resources and guidance to help you move forward. Reach out to our financial experts to get started.