When you find someone special who you want to spend your life with, your first thought probably does not involve the state of that person’s finances. That’s perfectly fine — love shouldn’t be about money. But if you reach the point where you’re going to be combining finances (whether you’re getting married, jointly signing a lease or some other situation), it’s a good idea to sit down and have a heart-to-heart about both of your finances. Very few people have an absolutely clean financial track record and that’s okay, but neither you nor your partner want to deal with nasty surprises after the fact. Asking the right questions — and making sure both of you answer them fully — is the easiest way to avoid such situations. Here are five such questions to get you started on this conversation.
- What are both of our debts and assets? Simply stating your financial situation outright can be an important first step when you’re considering combining finances. A lot of us are taught not to talk about money, so it isn’t out of the question that a relationship can get pretty far before the question even comes up. You don’t want to be judgmental about any details (that’s likely to cause problems, in and of itself), but you do want to go through all the details of both of your financial situations.
- What are our financial goals? It’s important to not only know where your finances are now but consider where you want them to be. To make your romantic relationship stronger, you’ve got to find a way to make both of your sets of goals work together. There may be some absolutely conflicting goals between the two of you, so you may also need to discuss what compromises you’re willing to make.
- Are there any issues on either of our credit history that could keep us from reaching our financial goals? Don’t assume that there’s nothing listed on the credit history just because someone’s financial situation is looking pretty good right now. Both of you will have to come clean, at least as far as discussing whether you’ll be able to reach your financial goals without a lot of extra work. Considering the impact a credit report can have on your ability to rent an apartment, buy a house or make other big financial moves, this question can be extremely important. You may need to go so far as to order a copy of each of your credit reports to make sure.
- Are there any big promises or obligations either of us have hanging out there? Many of us have financial considerations that are not official. Maybe you send a check to a family member regularly or have a friend who you’re helping out a little bit. Unless being with that special someone dramatically changes your personality, you’re not going to stop doing so and should make it clear how seriously you take any such personal considerations. Even if it’s not immediate — like you’ve promised to help someone with college when they get that far — it should be communicated.
- Are there any steps we need to take so that we both feel comfortable with our financial relationship? The simple truth is that not all of us will feel completely comfortable combining finances with someone we love. There are all sorts of factors that need to be considered, which is why there are such things as prenuptial agreements. You and your other half need to honestly discuss what it takes for both of you to be comfortable with joining your financial lives together.
When you’re sitting down with your significant other to talk about finances, don’t tell yourself that you have to get through every single one of these questions at top speed. If you need to break it up into a couple of conversations or if you find that another approach works better for the two of you, go for it. It’s almost a given that you’ll wind up having multiple discussions — between the fact that new considerations may pop up and there can be quite a few mechanics necessary to actually bring your finances together, it’s best not to assume that this is a one-off talk. The important thing is to make sure that you’re both clear on your collective financial situation and you feel comfortable with it.
David Note: In fact, talking about your finances should be a continuous event. Money is not everything, but it can have a huge impact on every day life. When you decide to spend the rest of your life with a special someone, you should feel comfortable having discussions money matters with him/her. The more you are in sync wiht one another, the less issues will arise later on. Can you imagine what could happen if you find out about your significant other’s credit card debt only because the two of you failed to get a home loan?
Have the chat, and remember to have an open mind!