A and B are in a loving and harmonious relationship. After spending some months dating and getting to know each other, they decide to get married. A is more judicious, scrounging and savings-oriented when it comes to finances. The focus is on saving, building wealth and accumulating assets for a rainy day.
B is a spend thrift who lives for today and believes in experiences rather than savings. B is of the opinion that experiences are more valuable than tangible wealth as they don’t depreciate in value and cannot be stolen. Believes in living the good life, packed with travel, adventure and experiences. How do you think their life together will turn out to be? While A will constantly refrain from over indulgence and extravagance, B thrives on it. There will forever be clashes about where to spend and save, and what to do with the money, unless a sound arrangement is in place.
Are they irresponsible when it comes to money? Are they constantly changing jobs and displaying a more carefree attitude when it comes to making money? Do you find them spending more on short-term, instant gratification offering things and experiences rather than saving for future?
You may want to identify and addresses financial value systems that are incompatible with yours before committing. The issues may or may not be bridged depending on how firmly you both are invested in your own beliefs. Are you prepared to live with a person whose financial beliefs do not match yours? Like we saw in the above example, if you are frugal and your partner is more of a spendthrift, you will need to work out a middle ground for long-time survival of the relationship.
Discussing finances can feel extremely discomforting and unromantic in the initial stages of the relationship. However, it is good to be honest and straightforward about it at the onset if you see yourself getting into a serious relationship. If your aim is to lead a frugal and completely debt-free life, it is important to mention it. Your partner may be the splurging kind who has bought (on credit) luxury cars, clothes and accessories that they can’t really afford. Do you see yourself living with a person who is living for the moment on credit without putting aside some savings for a rainy day? If you are not very judicious with money, do you see yourself spending your life with a person who is more focused on building an impressive investment portfolio?
Do you know how much money your partner makes? This isn’t about being a gold digger. It is about planning your life together. A hefty salary on paper doesn’t necessarily translate into a glowing take-home figure.
There are many factors such as taxes and variable components involved. Similarly, a huge annual turnover may mean little if there are heavy overhead expenses and business loans involved. If you are planning a life together by combining finances, you need to know your partner’s in-hand income and financial liabilities.
Although it is not important to be obsessed with money talk as a couple, both need to be aware of each other’s financial situation before entering a serious relationship. This can save you from a lot of future hurdles.
Let us take an example to prove the point. Ann and Joshua have been dating for a while and are madly in love with each other. They decide to get married. Both never bothered to talk about their finances just like several other couples. Post marriage, Ann discovers that though Joshua makes decent money, he gives away 20% to a charity.
She is not thrilled about this. Ann believes the money can be invested for the education and welfare of their future children over giving away to a charity, which can be done later in life. Joshua refuses to relent, since it is a cause that is close to his heart. Where do you think they are headed? Disaster. Wouldn’t it have been wiser for them to sit and talk about their financial commitments as a couple?
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