Your financial compatibility is important because when you marry your significant other, you’re marrying his or her financial habits too. And yet, as the U.S. Department of Health and Human Services points out, “people frequently ask themselves, ‘Am I ready for a serious relationship?’ However, people never think about whether or not they’re ready for a serious relationship with someone else’s credit? ”
The answer is important, because financial incompatibility is a leading cause of divorce in the United States. In a Kansas State longitudinal study – Examining the Relationship Between Financial Issues and Divorce – across 4,500 couples, financial arguments were cited as the top reason for divorce.
So before tying the knot, couples should have a serious discussion about their individual spending habits and attitudes about money. How does each of you perceive spending, debt, major purchases and use of credit cards? Knowing the answers to these questions can help you avoid conflict in the future.
Some couples are making an effort to find out about finances early in the relationship. NBC News reported that singles are increasingly using credit scores to size up their dates. And in a new survey conducted by Experian Consumer Services, half of married couples say that credit scores were important to them when choosing a mate.
And in a recent Credit.com survey assessing how married and divorced people deal with and credit and debt, 28 percent of divorced participants said they regretted not discussing credit and financial habits before getting married.
Money discussions tend to be awkward and uneasy. We simply don’t have the background and training to talk about it. Schools don’t teach basic money management. Even couples who participate in marriage counseling don’t get much direction or education in this area. And few of us had a serious discussion about money with our parents when we were growing up.
Still, our parents’ values around money most likely influenced our own values. So when you sit down to talk with your spouse or significant other about money, it’s important to talk about your background and upbringing. Did your parents fight about money, were they spendthrifts, were they afraid to spend money? What did they teach you about spending, saving and philanthropy?
The conversation should of course include a discussion about your current money habits — do you live paycheck to paycheck or work hard at saving your money? Do you pay off your credit cards each month or maintain an ongoing debt? Do you have college loans to pay off, and what kind of a credit score do you have?
You don’t necessarily have to have the same money “personality.” But you each have to understand your own personality and that of your spouse, so you can discuss them and come to terms with your differences. The alternative is fights about money issues, and power struggles over the checkbook.
What you learn from your discussions may determine whether you merge your checking and savings accounts, keep your finances separate, or merge some accounts and keep others separate.
Your financial compatibility comes into play in every purchase decision. To find out whether you and your spouse are financially compatible when it comes to the biggest buying decision you’ll ever make–buying a house, download our special report. It covers all the questions you should ask yourselves before you start house hunting.
Leading the industry through his innovative approach, Dino Katsiametis has over 17 years of extensive experience within mortgage, banking and real estate industries. His passion for the collective financial and investment services sector combined with his distinct insight, has catapulted Money Matters with Dino onto the forefront of financial news.
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