Why Should You Be Talking About Debt With Your PartnerFeb 14, 2018
There’s no question life changes after you’ve met the one. Whether you’re just moving in with your partner, thinking about marriage, or buying a home — new couples have plenty of financial decisions to think about. With this in mind, are enough Canadian couples talking about their debt with their partner?
Bringing personal debt into a relationship can obviously change how you make financial decisions. Yet our recent Debt Confessions poll finds that, nearly half of Canadians carrying a lot of debt are hiding financial behavior from their partners. This could be credit card debt, or debt from before their relationship.
Just as important, results show that debt and bad spending habits are a sticking point in many relationships. Six in ten respondents in a relationship say they wish they could change their partner’s financial habits.
A lack of financial compatibility even affects whether a person would marry someone in the first place. A U.S. survey found that 55 per cent of those aged 25 to 34 would not marry someone who had a lot of debt.
Clearly, relationships change when debt enters the equation. That’s why it’s important for newlyweds, if they haven’t already, to have a money talk early on. Finance writer Jessica Moorhouse stresses this in her blog “Love Is Not All You Need”, writing about the need to talk about financial goals and investment to avoid arguments down the road.
Here are a few strategies to consider for your finance conversation, and how to learn more about your compatibility.
- Do you reduce debt together or separately? Lay out all your debts on the table, and decide what you’re comfortable with. Is it worth combining and paying down together?
- Are you combining or dividing expenses? Some couples find it easier to manage a joint bank account, but if your spending habits are too far apart, it might be better to keep finances separate.
- Have you considered outside factors? Low interest rates have seen increases in Ontario household debt over the past six years, but rates and monthly payments are starting to rise. Should you and your partner consider this and pay down higher interest debts first? Having an idea of how outside factors can change your lifestyle is important.
- What are your future goals and tolerance for debt? It’s key to talk with your partner about what their savings goals are, and how tolerant they are of debt from mortgages, auto loans, etc. This can impact the timeline of big decisions like starting a family, or buying a home.
Make sure you and your partner bring everything to the table, including existing debt, investments, and savings statements. Then you can go to it: hash out your financial lives and figure out compatibility. This can get you set on short and long-term goals for paying down debt, adding to your savings, and reaching your financial goals.