Are you Compatible…Financially?

You’ve found the love of your life and enjoy hiking in the North Shore, cooking together and going to concerts. You both dream of visiting Machu Picchu at some point, and even know how many kids you hope to have together one day. But maybe you haven't yet had "money talks" to see if you're financially compatible. 

Although it's not always easy initiating conversations around money, talking openly about finances is important for your relationship's wellbeing. And it's better to have these discussions before things get too serious. Here are a few financial topics that should be discussed in advance:

Be honest about your debt

Debt can be a major source of stress, so it's important for both of you to know how much and what kind is being brought into the relationship. Is it student debt, car loans or credit card debt? If your partner has a lot of debt, or has a bad credit rating, this can affect your financial future together as it may make it more difficult to apply for a mortgage. It’s important to have open conversations about the true state of each of your finances before your relationship becomes more serious so you can discuss how it will be handled going forward. 

Spending habits - yes, the dreaded budget!

It's common for one person in the relationship to be the "spender" and the other the "saver". However, if one partner often overspends or makes impulsive purchases, it can lead to financial insecurity and put a strain on your relationship. Create a budget together (sigh…I know…not a fun task!) so you're both clear on your spending expectations, and to help avoid unpleasant surprises. By tracking your expenses early, it’s easier to save for financial goals such as a home, emergency fund, travel fund or new car.

Saving Habits

Just as spending too much can be a stressor, so can conflicting saving habits. Maybe you want to start saving for a home immediately, but your partner would prefer to take a few big vacations together before having kids. Maybe one of you grew up in a household that barely scraped by and as a result, is very frugal. This can be frustrating to the partner who is more carefree with their money. Try to understand the why behind the behaviour – this may make it easier to compromise.

Handling the finances

Will one of you be the CFO in the relationship and have the responsibility for ensuring the bills are paid on time, or will this be a shared effort? Will you have separate bank accounts or will you open a joint bank account? Or will it be a combination of the two? There is no right way to manage your finances as a new couple - it's a personal preference so you need to figure out what works best for you. 

Financial problems are a major contributor to divorce, but they don’t have to be. Having some open and honest conversations now will help build a strong foundation for your relationship and may prevent a lot of heartache in the future. 

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