Back in your youth, a person’s financial habits or wealth was never a factor in determining if the person was of high value or not. No one noticed or cared where a person worked, how much money they made, or what their credit score was in high school or college.
When you leave university or begin working from high school, the real world kicks in. You realize having your money in order directly impacts your life.
As you get older, intimate relationships will inevitably blossom. Some have the potential for marriage, if you chose that route. Before taking the leap, I cannot stress enough how important it is to vet your significant other through a “personal finance lens.” Not doing so could cost you your overall quality and success in life.
If you’re tired of being in debt, living paycheck to paycheck, not accruing wealth, or simply stressing about money, having a partner that has no clue where their (and possibly your) money is coming from and going will make your life a living h-e-double hockey sticks.
I highly advise to follow along and take notes in this week’s informative personal finance blog post!
Get Your Own Finances in Order First
Before you can critique or filter significant others through your “personal finance lens”, you need to have your own money and financial habits in order.
First off, set financial goals. Better yet, create a financial to-do list. Whether it’s paying off debt, putting a down payment on a house, saving for a bucket list vacation, you need to have some sort of financial direction in life.
Once your goals are set in place, learn how to budget. Every dollar spent AND earned should not be a surprise to you. With a bit of trial and error, budgeting will fast forward your path to knocking off these items on your to-do list.
While learning how to budget, you should be paying off that high interest debt, particularly credit card debt. Have a good plan for paying off student loans and getting through mortgage payments in a timely manner (unless you’re renting out a home). If you have a vehicle that’s still going strong, I highly advise to stick with it and not finance any new vehicle unless you can pay for the entirety of it.
If you have zero debt, great, that’s good. You’re a dime a dozen. Now it’s time to take the money you were using to pay off your debts and start saving 3-6 months’ worth of living expenses. This is an emergency fund for specific situations, like unemployment or unexpected high expenses (car repair/house damage). Never touch this money unless you’re desperate and need it.
This entire process from start to finish might take you one year, maybe ten, depending on a multitude of things. After it’s all said in done, you can consider yourself a pretty darn knowledgeable individual on personal finance and better vet significant other’s through the ever so important “personal finance lens.”
The Vetting Process
On to the personal finance vetting process. I have listed a few things below that I find more important than others when it comes to filtering out your partner through your “personal finance lens”:
1.) How did their relationship with money form?
The environment a child grows up in will have direct impact on how they view personal finance. Take notes on the financial habits of close family members and friends. Notice if he or she came from a poor or rich family, as well as their frugal or excessive spending lifestyle.
2.) Does your partner have financial goals, and do they align with yours?
If you’re significant other has ZERO financial goals, then that is a ginormous red flag. Run away. Typically, in these sorts of relationships, one carries all the financial responsibility, while the other spends all the money, which is destined for failure.
You and your partner need similar financial goals in order for the relationship to work. Otherwise, there will be problems.
3.) What’s your partner’s financial history?
This part will require you to ask your significant other what his/her credit score is and why it’s that way.
If he/she has a good credit score, then no issues. If he/she has a low but improving credit score, keep a close eye on their financial responsibilities for the time being. If he/she has a low credit score with no signs of ever improving, you need to run. It’s likely inevitable that your significant other’s financial habits will cause your credit score to take a hit in the long run.
4.) What type and how much debt has your partner accrued?
If your plan is to eventually get married, you need to be aware of his/her debt you might end up paying off.
If your partner has student loans, paying them off responsibility with a thorough payment plan, then no worries. If it’s credit card debt, run. Most credit card debt comes from uncontrollable spending habits that’ll drain your bank account dry.
5.) What saving and retirement plan does your partner have?
Just as with you and your partner’s financial goals, saving and retirement plans should be in alignment.
As you get older, your wealth should be increasing. If not, then that is another red flag. Whether it’s through savings or retirement, if your partner doesn’t ever increase his/her wealth, then that mean’s their living at or above their means. Once again, run.
I won’t go into detail on personal finance dealing with marriage or kids at this point in my life. I try to stick to topics that I’ve dealt with through personal experience and now understand.
But, if you’re already married and your spouse doesn’t understand nor wants to educate themselves on personal finance, then I highly recommend sitting down and having a serious talk. As long as both of you come to an agreement on common financial goals and keep communication flowing, then everything SHOULD be okay.
Hope you all enjoyed this week’s blog post! As always, don’t forget to like, comment, share, and subscribe!
“Money, like emotions, is something you must control to keep your life on the right track.”
Book of the Month: “The Book on Making Money” by Steve Oliverez