Category : Personal or family, Budget

In debt and in love, how to talk money with your partner

Are you responsible for your partner’s debt? Should you talk with them about your own debt? How can you budget as a couple? Read on for a few tips on how to talk money with your significant other.

Picture this: you’re in a relationship. A perfect one. Not to come and mess with your happiness, but did you know that money is the number one reason for divorce?

Yes. The way you talk about money can make or break your entire relationship.

Talking about money is not always easy, and, of course, it’s better not do it on your first date (especially if you want a second one), but there comes a time when it’s time to know, you know? Here are a few tips on how to avoid all those pesky conflicts and make talking money with your partner somewhat pleasurable.

So, you have some debt

Many people feel a kind of shame when it comes to money issues. Just thinking about it might be hard. Perhaps you don’t want to tell your partner about your debt or that you have bad credit. Or maybe you’re just wondering when is the right time to admit it to them.

Even if it’s tempting to keep this for yourself, it would be a good idea to have this conversation before you move in together or start sharing finances.

Here is some advice on how to approach the subject:

Keep it Casual

Don’t make this into an event and, above all, avoid the phrase “We need to talk.” Do not make it about them. You want to talk about your finances, about what you’re dealing with. Maybe the fact that they spend way too much money is what triggered the need for this conversation in the first place, but it’s truly not about them.

It’s about you.

One way to keep it casual is to test the waters by talking about your hopes and dreams. Another tactic could be the all-time favourite: “What if you won the lottery? What would you do with the money?” If all else fails, you can always start by mentioning an article you recently read on the subject… 😉

Just remember that money is part of life and you don’t need to make it a big deal. It becomes a huge deal only when you don’t talk about it.

And at the end of the day, you know your partner best. Choose an intimate but relaxed setting and try to keep it positive.

Talk about your money problems in a nuanced way

When it comes to admitting your shortcomings, it’s always better to follow up with some of your successes and strengths. Maybe you’ll have a hard time admitting that you made some irresponsible choices with money before. But also specify how you are working towards a better future. Better yet, explain exactly how you’re working towards paying off this debt now – and if you aren’t, maybe it’s time you asked for a little help?

Talk about it openly: the good, the bad and the scary. Don’t be ashamed or hide things. You are taking steps to fix your financial life. Most of the time, people will respect that.

Know Your Reasons

It is a good idea to tell your significant other why you want to have this conversation, but first you must know it yourself. A reason that often comes up is that you see a future with this person and you want their support moving forward (we’re talking emotional support here – don’t go reaching for their credit card yet). Also, you might use this time to tell them you are hoping they will share their situation too and highlight how you can support them back.

Are you responsible for your partner’s debt?

So maybe you initiated the conversation. Maybe your partner appreciated your honesty and openness. And maybe you were lucky enough for them to open up as well.

Now what? They’re in debt, too?

Whatever you do, please don’t freak out, and make sure that you never judge someone for their financial decisions. Remember that we live in a consumer society that is designed to trick us into constantly spending more. But if you can’t help but wonder if you’re responsible for your partner’s debt, please read on.

In some ways, you aren’t responsible for your partner’s debt

Is there a ring on your finger? No? Then it’s not your problem! Just joking. Even if you were married, in Canada, marriage does not make you liable for your spouse’s past debt. It’s also illegal for a recovery agency to contact you about a spouse’s debt. All of this means that the simple answer is no — you are not responsible, and your partner’s debts do not become yours if they pass away, nor will your debts be transferred to someone else should you die.

In some ways, you are responsible for your partner’s debt

Even though technically your partner’s debt is not your problem, you may want to help pay it down as you work towards your joint future of owning a home, creating beautiful children, or whatever else you’re aiming for. Also, keep in mind that you are responsible for those debts if you co-signed for them, or if you signed for them as a guarantee. In both these cases, you will be held accountable if your partner stopped paying for any reason.

You should also be wary of secondary cards. If you use a partner’s card with your name on it, you could be held responsible for all purchases made on this card, even if you did not send the application yourself. Remember when I told you not to reach for their credit card? There it is. I’ll get my own card, thank you. (But really, make sure you read the fine print before you sign anything.)

Couples who budget together stay together

If you are in a serious relationship, it’s best to make sure you are on the same page about lots of things, including finances. Don’t forget that you and your partner should form a team.

Set common goals with your partner

Since you and your partner should form a team, why not work on your goals together?

You can even go for the classic: where do you see yourselves in 5 years? But don’t stop there. Ask yourselves how you will be working together towards these goals. Each of you needs to be willing to make some sort of sacrifice to reach the goal, and if you’re initiating this, you should be the first one to offer up something.

Even if it’s a personal goal for you (like paying off your credit card), it can always be interesting to make it a common goal so your partner knows how flexible your budget is next time you decide to go out together.

Don’t be afraid of numbers

Do you know how many men propose while not knowing that the average price of a wedding is $30,717

A LOT OF THEM.

Whether it’s marriage, travelling plans, kids – you need to talk numbers. Ask yourselves: How much are we going to be spending? How much are we going to save to get there? Are we going to take out a loan for this? etc.

But Also Talk Value

Sometimes, it’s fine to agree to disagree.

Maybe my partner doesn’t get why I need this $50 eye cream, and maybe I don’t get how a $300 designer coat is a great deal. That’s why sometimes you need to take the time to explain exactly why you value these items, and your partner needs to be open to your difference of opinion.

This is especially true when it comes to buying items you are going to share. You might not care about the size of your TV, but if your partner really does, it’s possible you’ll need to get out your wallet for them a little bit… And then maybe they’ll let you buy that sectional couch you really wanted! It’s all about balance.

Find your own joint savings method

When it comes to savings, it’s different for everyone:

• Some couples allow each other some spending money, no questions asked.
• Some couples set a fixed amount to not exceed without a conversation.
• And some other couples just create a savings account (joint or not) and promise to deposit a certain amount of money in it each month.

Come to an understanding that works for both of you and stick to it.

Hold each other accountable

Depending on your mutual understanding and whether you have a joint account or not, if you’re planning on spending your life together, it might be time for you to accept that some things are going to be up for discussion.

Whatever is it, just make sure you find a way to hold each other accountable without getting on your partner’s nerves for every cent spent…

It could be as simple as turning what you say into a question when talking about your partner’s spending, so as not to accidentally offend them.

Is the new, very expensive video game console more important than paying off your student loan?
(Don’t be mad if you don’t like the answer! 😬)

Basically, once your budget is set and you know how much you are supposed to spend and save, you’ll want some periodic check-ins. A great way to do this without harassing your partner is to plan a specific time each week for financial updates.

Kind of like a date, a budgeting date… sounds fun, right?

Talking about money with your partner might seem like an impossible task

But it shouldn’t be.

Ultimately, whatever it is you want to talk about, take the plunge. It’s going to be liberating.

And if all else fails, you can contact us to know more about your borrowing options. (You know what they say: if you can’t talk about it, fix it – or did I just made that up?)