Valentine’s Day brings to mind chocolate, roses and engagements, but before you get on one knee or swoon over a diamond ring, take a step back and talk about a taboo but important topic: money.
“Money is the No. 1 source of tension in relationships,” says Kris Miller, author of “Ready for Pretirement? 3 Secrets for Safe Money and a Fabulous Future” and a certified senior adviser and estate planning specialist in Hemet, California. “It’s hard to take your romance into such a hard conversation. People even have trouble talking to themselves about money. But you need to realize it’s a sign of love to talk about it because you don’t want money to cause trouble later.”
Paul Nourigat, author of “No Time to Wander: The Financial Compass for Young Americans” and a senior financial consultant in Portland, Oregon, says financial compatibility is as crucial for long-term marital success as emotional compatibility.
“Differences in financial status or attitudes are fine as long as they are identified upfront and you can decide as a couple how to handle that,” Nourigat says.
Here are some of the personal finance questions to answer before you decide you’re ready for a lifelong commitment.
Nourigat suggests you start by talking about shared dreams and values.
“I don’t buy into the idea of asking someone about their credit score. I just don’t think too many people would actually do that,” Nourigat says. “But it’s natural to talk about your life objectives, such as where you want to live or your career aspirations and your common goals for your future. Those objectives have financial ramifications that can lead you into a natural discussion about money.”
Couples can learn a lot about each other’s personal finance attitudes toward money even in the near term when they start talking about practical things such as wedding plans, says Marcy Keckler, vice president of advice strategy and programs for Ameriprise Financial in Minneapolis.
“Talking about how much you’ll spend on your wedding can lead into other money discussions, such as whether you want to take a dream trip, buy a home or have children in the future,” Keckler says. “It’s important that couples know each other’s aspirations because it can be a problem in the future if one person thought the plan was to stay in a city apartment forever while the other expects to buy a house in the suburbs.”
While most people are uncomfortable being direct about their debt and their income, Keckler says couples need to be completely open about their personal finance situation.
“It boils down to knowing what they earn, what they owe and what they own,” Keckler says. “You need to know how someone’s income is structured, too, such as a biweekly paycheck or a sporadic income based on commissions and bonuses.”
Senior adviser and estate planner Miller says sharing information about student loans, credit card debt and mortgages is important because once you combine households, you’ll realize you share the debt and need to develop a strategy together to eliminate it.
Keckler says a big problem for some couples can be an imbalance in finances, with one person debt-free and one with a five- or six-figure debt. Discussing the issue openly before marriage can prevent arguments in the future.
“Being open about your finances is important at any life stage, but it’s especially important for older couples who may have more assets and perhaps children from a previous marriage because that adds on another level of responsibilities,” Keckler says.
Some couples are on the same page about saving and spending money, while others have one partner who’s frugal and another who’s a spendthrift. In either case, Keckler says you need to decide how you’ll handle your money together.
“If you each have a financial professional you work with, you’ll have to decide if you want to choose one or keep working with both,” Keckler says.
She says couples who don’t have a financial planner may want to consult one as a catalyst for discussing how to blend their finances.
“Avoid surprising your mate with bad news,” financial consultant Nourigat says. “Open conversation and struggling together can help couples move forward as a team. Also, if one partner is more skilled than the other with financial matters, it’s important not to intimidate the less skilled partner.”
Miller says couples need to decide who will pay the bills and whether they will combine all their finances or keep some separate.
“You don’t have to agree on all your habits, but you have to put a plan in place with goals,” Miller says. “You need to decide whether you’ll put a cap on purchases or at least talk about purchases above a certain limit.”
When the veil of love falls over your eyes, you may not want to have it lifted to face the reality of financial responsibilities, but experts say you can avoid future drama over money by watching out for signals that indicate a potential problem.
Keckler says the biggest red flag is when your potential life partner shows substantial reluctance or unwillingness to share information about financial matters.
“Look out for someone who appears to be spending beyond their means or is under great financial stress,” Nourigat says. “A big indication of a problem is when someone needs to borrow money from other people or requests that you co-sign a loan before you’re married.”
Miller says someone who’s constantly shopping or picking up the tab for others could be financially irresponsible.
Worse, though, is someone who dodges questions about money, she says.
“If it’s just that they don’t want to talk about it, frame it this way: You’re in love and want to make sure there are no obstacles to your future together,” Miller says. “Money can be a time bomb if you don’t talk about it.”
Your financial habits, your family’s financial habits and your money philosophy can sabotage you if you don’t recognize their influence on you and your future spouse.
“You can start by talking about how they paid for college or about when they started working or about their parents,” Keckler says. “Just remember that people can invent their own financial attitudes if they didn’t like the way their parents handled money or if they want to change their past habits.”
Keckler says couples, particularly if they’re young, need to balance their current financial situation with plans for the future, including children, a home and retirement.
“Couples need to talk about their attitudes about spending, savings and philanthropy,” Miller says. “Just because you can now share two incomes doesn’t mean you can spend it all. You need a short-term plan and a 20-year plan, including a discussion of your retirement plan, no matter how young you are.”
Miller says the best thing a couple can do to prevent a potential divorce is to identify any financial issues between them and work out the problems together.