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Money Matters: The Importance of Financial Compatibility in Dating

  •  By
  •  Murray Humphrey

When it comes to dating, compatibility is key. You want to find someone who shares your interests, values, and lifestyle. But have you ever considered the importance of financial compatibility in a relationship? While it may not be the most romantic topic, it can have a significant impact on the success of your relationship.

Studies have shown that couples who have similar spending habits, savings goals, and attitudes towards money are more likely to have a successful long-term relationship. By understanding each other's financial habits and priorities, couples can work together to achieve their goals and avoid financial conflicts.

Is talking about money easy?

Discussing financial matters with a significant other can be a sensitive and uncomfortable topic for some. Money is often considered a personal and private matter, and bringing it up with a partner can bring up feelings of insecurity or vulnerability. However, others may feel completely comfortable discussing their finances and may even see it as an important aspect of their relationship. Whether it is a comfortable or uncomfortable topic, having open and honest conversations about finances with your partner is crucial for maintaining a healthy and successful relationship, as it sets a foundation for shared financial goals and allows for open communication.

A study by M&S Bank in 2020 revealed that only 17% of people in a relationship regularly talk about money with their partner. More than 1 in 10 are reluctant to talk about their debts, do not share how much they earn, or know details of their partner’s wages.

Only 17% of people in a relationship regularly talk about money with their partner.

When should you discuss finances?

The timeline for discussing finances in a relationship can vary greatly. Some individuals may bring up the topic of finances early on in the dating process, while others may wait until they are more committed or have been together for a longer time. The most important factor is not necessarily when the discussion takes place, but rather that it happens at a point when both partners feel comfortable and ready to have an open and honest conversation about their financial situation and goals.

According to The Ascent's survey of more than 1,000 people in committed relationships:

  • It took an average of 9 months for people to reveal their annual salaries to their partners.
  • It took 10 months to reveal debt incurred and to share details about monthly expenses.
  • Checking and savings account balances were revealed after 11 months -- shortly before an exchange of house keys. 
  • Revealing investment history occurred after 11 months of dating. 
  • Partners didn't disclose their respective credit scores until after an average of a year and 3 months.

The most common reason for disagreements

Money can be a sensitive and personal topic, and differences in spending habits, income levels, and financial goals can lead to conflict. One partner may believe in saving for the future while the other may want to enjoy their earnings in the present. One may be more frugal while the other is more extravagant. These disagreements can cause tension and stress in a relationship and lead to larger problems if not addressed and resolved effectively. In a survey by Protectivity, when couples were asked what the most common reason for arguing with a partner was, 27% of those asked cited money reasons.

27% of couples cite money reasons as the most common reason for arguing with a partner.

Couples need to have open and honest conversations about their attitudes towards money and how they can align their priorities to avoid financial conflicts. This can include setting financial goals together, creating a budget, and finding ways to support each other's financial priorities.

Dating and the Gender Pay Gap

In 2022 more women than men will be affected by the cost-of-living crisis, as more women work part-time, they hold 60% of below-living wage jobs, and the Office for National Statistics reported a 15.4% gender pay gap in 2022. Lower pay means essential costs are a higher proportion of outgoings, as those on smaller salaries still have to pay the same for food, energy, accommodation, car insurance etc. Further price rises, especially for energy, now mean that for some, basic living costs are exceeding earnings. Not only this, but lower wages mean that there remains a difference in pension savings known as the Gender Pension Gap.

Women are often paid less than men for the same work and this disparity can cause tension in dating and relationships, as one partner may feel like they are carrying more of the financial burden. It's important for couples to have open and honest conversations about their financial expectations and goals, and to consider the impact of the gender pay gap on their relationship. This can include discussing ways to close the pay gap, such as advocating for equal pay in the workplace and finding creative solutions to balance the financial responsibilities in the relationship. Addressing the pay gap in dating can help build stronger, more equitable relationships and promote gender equality in all areas of life.

Financial Dos and Don'ts of Dating

98% of people surveyed wouldn’t be put off dating someone if they earned more money than them.

When Penfold surveyed their Instagram followers about their financial dos and don'ts, 98% of people surveyed wouldn’t be put off dating someone if they earned more money than them. However, some financial dos and don’ts could be deal breakers when it comes to a happy relationship. Penfold has come up with practical and effective tips to help couples overcome any financial challenges they might face.

Dos

1. Set Financial Goals

According to a study by The Ascent, 70% of respondents hoped their partner would set financial goals.

By having open and honest conversations about money and establishing shared financial goals, couples can work together to achieve their desired financial future. This can help build trust and increase financial stability in the relationship. Setting goals can also help couples align their priorities, such as saving for a home, starting a business, or planning for retirement. Additionally, working towards shared financial goals can increase the relationship's feeling of accomplishment and satisfaction.

2. Financial Stability

70% of respondents in the same survey agreed that their partner should have full-time employment.

Financial stability is a crucial factor in a healthy relationship and having a stable source of income can provide peace of mind and security. Being employed can also indicate a strong work ethic and responsibility, which are important qualities in a partner. Additionally, being fully employed often allows individuals to contribute to the financial well-being of the relationship, allowing for shared financial goals to be achieved more easily.

Financial stability can be achieved through responsible spending, saving, and investing habits, as well as maintaining a strong credit score and avoiding debt. It provides peace of mind, allowing individuals to feel secure in their financial situation and to plan for the future with confidence.

3. Follow a Set Budget

70% of people surveyed agreed that “Following a Budget” was a dating must-have in a relationship.

We all have different spending habits, and it's essential to understand what your partners are so you can plan for the future together. Some people prefer to splurge on luxury items, while others prefer to save as much as possible. If your spending habits are significantly different, it can lead to disagreements, and even arguments, if you're not on the same page.

By having a budget in place, one can ensure that their expenses do not exceed their income, reducing the likelihood of falling into debt. Additionally, a budget can help individuals to save towards their financial goals, such as buying a home, paying off debt, or building an emergency fund.

4. Financially Independent

67% of people surveyed agreed that financial independence was key for a happy relationship.

Being financially independent is having enough income or wealth to ensure that you can be self-reliant and support your lifestyle without having to rely on someone else. A 'yours, mine and ours' approach is often great as it means both partners contribute equally (or whatever has been agreed to) to household expenses, savings accounts and shared assets straight after payday, and then both partners have their bank accounts too. This doesn’t mean you can’t have shared money goals as well, but it also allows you to be financially clued up and responsible for your own money.

Don'ts

1. Lack of Savings

34% of Brits wouldn’t date someone without savings, according to a Penfold survey.

According to a survey of Penfold’s Instagram followers, 34% of Brits wouldn’t date someone without savings.

Saving for the future is important, and it's essential to align your savings goals. Do you both have a retirement plan or a specific savings goal in mind? If so, it's important to work together to achieve these goals. If you don’t, then it might become a problem - especially if you’re already in a relationship as 1 in 3 couples who fight the most frequently argue about savings goals.

Remember, the key to building healthy savings is consistency. Start small, stay disciplined, and make it a priority in your budget, and you'll be well on your way to financial stability.

2. Personal Debt

Debt can be a major stressor in a relationship, and discussing any outstanding debts is important before getting serious. If your partner has a lot of debt, it can affect your financial future together, and it's crucial to discuss how you'll handle it together. However, if you’re just starting to date it might be considered a big red flag. According to the report, personal debt is the biggest financial turnoff among men and women with 1 in 3 respondents considering it a deal-breaker.

To manage personal debt, start by evaluating all debts, paying off the debt with the highest interest rate first, making a budget, staying away from taking on additional debt, and seeking professional assistance if necessary. You may recover control of your money and work toward a debt-free future with a commitment to debt repayment and a budget that takes debt payback into account.

3. Bad Spending Habits

According to a recent survey conducted by Western and Southern Financial Group, 31% of women found irresponsible spending a deal-breaker, whereas financial illiteracy was a more significant issue for 28% of men.

When one partner consistently overspends or makes impulsive purchases, it can lead to financial insecurity and put a strain on the relationship. This can cause disagreements about money and make it difficult to reach shared financial goals. Additionally, bad spending habits can create a sense of mistrust and lead to a lack of financial stability in the relationship.

Maintain a log of all expenditures, make a budget, abstain from impulsive purchases, seek affordable substitutes, and exercise restraint to lower your exposure to advertisements and sales. You may take charge of your finances and make progress toward your financial objectives by making a conscious effort to break these bad habits and maintain a budget.

Financial Compatibility

Financial compatibility is all about understanding each other's spending habits, debt, savings goals, financial priorities, and attitudes towards money. These are important factors because they directly affect your future together, and they can cause significant stress if they're not aligned.

Monika Kozlowska, life and business coach comments:

"I think it is important to clarify what 'financial compatibility' is - to me it’s being accepting and aware of the relationship our partner has with money. I think it is all about finding the courage to be vulnerable and share how and why we feel a certain way about spending and saving, and listening without judgement to our partner while doing our best to understand.
I also think it is important to ask ourselves a question ‘Is this a problem for me that my partner is a massive saver/spender?’ Because it doesn’t necessarily have to be. I do think having similar values helps a relationship succeed, but everything else - like financial compatibility - comes down to the willingness to communicate openly without judgement, understand, accept and if needed - meet in the middle."

Pete Hykin, Co-Founder at Penfold comments,

“Finding financial compatibility in a relationship can be challenging during the dating period, but it's a crucial conversation to have. Open and honest discussions about money, budgeting, and spending habits lay the foundation for a harmonious and secure future as a couple
It's also important to remember that financial compatibility is not just about earning a high salary or having a large savings account. Rather, it's about having a shared approach to managing money, such as a commitment to saving, paying off debt, and investing for the future.”
A photo of Murray Humphrey

Murray Humphrey

Penfold

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