Love and Money: Why Communication is Key

When it comes to money, what’s love got to do with it? Well quite a bit, apparently. Take, for example, the Federal Reserve research reporting that couples with higher credit scores have a better chance at finding love. Or the recent Bankrate.com survey where almost two in five U.S. adults said knowing someone’s credit score would impact their interest in dating that person. We’re not in the business of giving advice on love or relationships, but knowledge is power, so here are a few pieces of information that may be useful when approaching money in the context of a romantic relationship.

Debt is a big deal…sometimes

SoFi, a student loan company, surveyed 2,000 millennials to gain insight into how they think about debt when it comes to their love lives. When asked about dating deal-breakers, 20.9% of those surveyed listed debt as the main issue — in fact, it was the second highest concern reported. The first was being a workaholic, which was a concern for 21.4% of respondents.

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Honesty is [still] the best policy

It probably comes no surprise that experts say lying about your finances is not recommended if you want to enjoy a healthy relationship. According to Ted Beck, president and CEO of the National Endowment for Financial Education, “Hiding or lying about small amounts of money can damage a relationship just as effectively as a high-dollar deceit. In fact, in all cases of this deception, people affected say it impacted their relationship in some way — almost always negatively. It causes arguments, erosion of trust, separation or even divorce.”

If that sounds like common sense to you, you might be surprised to learn that, according to a 2016 Harris poll, 42 percent of people admit to committing financial deception in their relationships. Other telling statistics are that more than a third hide purchases or bank accounts from partners, and another 16% of people in relationships who lie about other, more serious financial matters.

According to relationship expert April Masini, “When people cheat financially, they’re doing so because they want to spend on something that they don’t want their partner to know about because their partner won’t approve.” Masini says financial infidelity in relationships is not uncommon at all; in fact, some people find it more difficult to move on from this than other forms of dishonesty or betrayal. Understandably, finding out that your partner has been deceitful can be damaging to a relationship; the 46% of men and 43% of women who said money has been a reason they’ve broken for with someone also said a partner lying about money was a valid reason for splitting up.

Be clear

There’s really no good example of when clear communication with a significant other (S.O.) is a bad idea, but when it comes to money, it can be a “make or break” tactic, especially when shared finances are involved. When one person in a relationship is in the financial driver’s seat — whether that means they have or make more money, or are just better with it — it is possible for that person to develop expectations about what his or her partner is contributing to the relationship. This can happen subconsciously, even if the “driver” is perfectly happy in this role. Setting expectations for your S.O. other without sharing what they are may not yield the results you’re hoping for…and it also isn’t very fair, is it? Establishing together where you both stand financially, and agreeing to what each of you is able, willing, or expected to bring to the table can help prevent frustration, disappointment, and arguments from boiling up.

Talk about how you grew up

A recent Ameriprise study on couples and money reported “73% of individuals have money management styles that are different from their partner’s.” Like many aspects of any person’s habits or personality, this “style” may have been influenced by his or her upbringing. For example, the way your parents or guardians treated money and talked — or didn’t talk, or yelled — about finances may have affected the way you do. By sharing these money stories with each other, you may gain a better understanding of the “why” behind both of your money management styles and habits. This might allow you to empathize and work together instead of labeling either person as being right or wrong.

Give your S.O. some credit

Federal Reserve Board research from 2015 suggested people with the highest credit scores were most likely to form long-lasting committed relationships. On the flip slide, the research indicated that the bigger the discrepancy between a couple’s credit scores, the more likely the relationship was to end within the first five years. This is certainly something to keep in mind, and a credit score is important for many reasons. That said, it is only one piece of a person’s larger financial puzzle. A low credit score doesn’t necessarily equate to being irresponsible or bad with money. It could be a result of someone facing circumstances that were out of his or her control, such as medical bills or another emergency situation. This is just one of many reasons why discussing finances is important.

Once your finances are in order as a couple and you’re ready to make a major purchase together, such as a home here in northern New Jersey, it’s important to have experts help you along the way to bolster all the hard work you’ve done. NVE has you covered! Our award-winning Mortgage Specialist will walk you through a range of mortgage products to help you determine what best meets your lifestyle needs, and support you as you navigate the sometimes daunting but always exciting process of becoming a homeowner!

For information about NVE’s personal and business products and services, visit our website. You can also stop by your convenient Bergen County neighborhood branch, or call us at 1-866-NVE BANK (683-2265).

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Sources:

https://www.sofi.com/blog/money-dating-debt-millennial-survey-results/

https://www.gobankingrates.com/personal-finance/talk-significant-other-money/

https://www.gobankingrates.com/personal-finance/money-ever-reason-ended-relationship/

https://www.bloomberg.com/news/articles/2017-02-07/40-of-millennials-prefer-to-tell-a-date-about-an-std-than-debt

http://www.chicagotribune.com/lifestyles/sc-credit-score-relationship-family-1220-20170120-story.html

https://www.ameriprise.com/retirement/insights/ameriprise-research-studies/couples-and-money-study/

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About NVE Bank

The NVE Blog should not be used for banking purposes relating to NVE Bank. Please do not disclose any personal or business banking information on this site. NVE is an Equal Opportunity Lender, Equal Housing and Member FDIC. NVE Bank, established in 1887, offers an extensive range of personal and business products and services. The Bank maintains 12 offices conveniently located throughout Bergen County. For more information, please call our toll-free number 1-866-NVE-Bank (683-2265) or visit our website.
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