So you’ve met someone new and things are starting to get serious. You may be reluctant to bring up the unromantic topic of money. However, if you're thinking of moving in together or otherwise entangling your finances, it’s a really good idea to talk honestly about money.
Why it’s important
Different people have different attitudes to money. Your partner might be totally relaxed about running up a big credit card bill and not paying it off in full, whereas the very idea of that brings you out in a sweat. One of you might be comfortable with responsible debt, the other might be completely debt-averse.
You may also have different financial goals. One of you may want to get on the property ladder, while the other is perfectly happy renting and wants to save for travel instead.
Whatever your situation, talking openly and honestly about your money attitudes and financial goals can help you financially flourish together. You might not always agree but at least you’ll have a better understanding of how to compromise.
When to talk about money
While you don’t necessarily want to bring up your credit score on a first date, the earlier in a relationship you talk about money, the better. (Although - fun fact - credit scores are so well understood and prevalent in the US that they sometimes do appear on people’s online dating profiles!)
When you’re dating, you don’t have to go into great detail but having some idea of each other’s financial reality can stop misunderstandings and resentments developing. For example, one of you may love eating in lavish restaurants while this just causes the other one financial stress. It’s so much easier to bring this up early on - the longer you wait, the more awkward you will feel about it.
Talking about financial goals in general terms, or simply life goals, early on in a relationship can be a great way to get to know someone and find out what’s important to them. It’s not about judging, it’s about understanding someone else’s perspective and what’s important to them.
If you’re at the point of considering moving in with your partner, that’s when it becomes an even better idea to have a full and frank discussion about finances. Ideally well before you’re under the same roof.
You may not want to disclose how much you have in savings or investments at this stage, but you should share your day-to-day financial situation. In other words, how much you have coming in and any financial commitments going out, like payments on existing debts, for example. And it’s a good idea to be clear from the start about who will be paying for what.
Should you manage your finances jointly or separately?
There’s no right or wrong answer to this question - every couple is different. Some people find it easier to have a joint account just for household bills, that both parties put an equal amount into each month, while keeping the rest of their finances separate.
Some people like to pool everything in a joint account while others will keep everything strictly separate.
The important thing is to find a solution that suits your relationship. Talk it over and come up with something you’re both happy with. If you’re struggling to agree it can be a good idea to seek professional financial advice for some external perspective.
Talking about the tough stuff
If you have problem debt - debt you can’t manage the payments on, so it just keeps growing - hiding it from your partner is probably not going to help - your stress levels or the relationship.
If you are preparing to tell your partner about some skeletons in your financial closet, just be clear, and honest. Show them the paperwork, be ready to answer questions and try to talk through how you might start to address it, or seek external advice.
Ultimately it’s generally better to be upfront before your debt crops up when you’re trying to apply for something like a mortgage together.
If you’re the person in the relationship finding out about your partner’s debts, remember it probably took a bit of courage for them to tell you, try and be non-judgemental and constructive. Look at how to start solving the problem.
Sorted.org.nz can be a great place to start your financial planning together.
- We write these articles for you, our Harmoney borrowers, to be, what we hope, are helpful tools for different aspects of life. The information is designed to be a general guide only. As you read, you should consider how - or if - the information might apply to your circumstances, and consider if your needs mean you should seek further advice from an expert in that particular field.