Few people talk much about their finances early in a relationship. When you're still learning about your new romantic interest's favorite music and cuisines, it's a bit awkward to ask how much credit card debt they have.
The problem is that even as couples get more serious about each other -- and sometimes, even after they decide to get married -- they frequently keep sidestepping those potentially fraught money discussions. In fact, only 51% of engaged couples talk about how they will handle money once they get married before they tie the knot, according to a recent survey. And among respondents to that SunTrust survey (conducted by The Harris Poll), only 41% even told their soon-to-be-spouse exactly how much they earned, while just 36% disclosed the full extent of their debts.
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Communication failures like those are a recipe for relationship disasters. But wealth advisor Julia Pham of investment management firm Halbert Hargrove has some suggestions that can help couples figure out how to begin those discussions, and avoid some common financial pitfalls.
Go in eyes open
As noted above, a first date may not be the best time to bring up finances, though Pham knows someone "who felt comfortable asking their date that they just met what their credit score was!" That's probably a little pushy for that stage of things -- and it's a move that could seriously cut your odds of getting a second date.
"I typically find that a good time to talk about finances is when things start to get serious," she wrote. (Our interview was conducted by email.) "However, the nice thing is that people will show you who they are by how they act, and you can figure out early on some hints as to how a person manages money through certain behavioral tells."
You can tell a lot about a person from their spending habits. Of course, you should also factor in that someone trying to impress you might be acting somewhat out of character when it comes to their spending on those early dates.
"Do they act impulsively and spend lots of money on flashy clothes or accessories? Are they constantly on social media posting pictures of their most recent luxury vacation, even though what they do for a living doesn't seem like it would support that lifestyle?" she wrote. "These are red flags and signs that they could be spending beyond their means."
There's no universally right moment in a relationship to sit down for a deep chat on finances, but there is a point beyond which people shouldn't delay: Once a couple decides to move in together, it's imperative that they lay all their cards on the table. And that conversation should go well beyond each person's financial situation. A soon-to-be cohabitating couple needs to get clear about how they'll handle money together.
"There is no right or wrong way," Pham wrote. "Whether they decide to combine finances or keep them separate, it's important to communicate, be 100% honest, and be respectful of the other person's opinion about money."
That can be particularly hard if the two have widely differing views on handling money. In such cases, Pham offers this suggestion.
"Having a hybrid of both joint and separate accounts is also a great solution, so that shared expenses can be easily paid for while [each party is] able to maintain some independence and control," she wrote.
Keep an open dialogue
Once you move past the dating stage and into being a couple, it's important to maintain an open financial dialogue. This means talking about what your hopes and dreams are, as well as how you plan to achieve them. If one person wants to embrace a life of frugality so they can retire by 45, while the other always expected to work until 70, but spend more freely along the way, well, that disparity needs to be addressed.
It all comes down to openness. You can avoid fights -- and even breakups -- with a policy of transparency. So keep your surprises in the romantic realm, rather than on your credit report.
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