Should You Have Money-Related Relationship Dealbreakers?

Why It Could Be a Bad Idea to Date Someone Financially Incompatible

Two couples on a date at the lake.
••• Christian Thomas / Getty Images

You're seeing someone new. You've been on a few dates and everything seems to be heading in the right direction.

There was that dinner downtown. The afternoon in the park. The evening concert. You've enjoyed every date, and you're wondering if this could develop into something serious.

But there's one small concern — your new date appears to have messy financial habits.

Maybe they spend too much. Maybe they gamble. Maybe they invest in such aggressive, risky ventures that you feel as though they may as well be gambling.

Of course, you reassure yourself, you should marry for love, not money. Isn't it selfish or materialistic to reject a potential partner because of their financial habits?

That's the pep talk you give yourself every time you feel doubts creeping in. But no matter how often you give yourself that same internal lecture, those worries linger.

What gives? Are there certain financial deal-breakers within a relationship? And is that okay?

Let's explore this topic in depth. Are you financially compatible?

The Case for Deciding on Your Deal-Breakers… Before You Get Serious

First, let's start with a few caveats.

We're not talking about creating standards based on the amount of money that a person makes — such as a salary of $25,000 vs. $100,000. We're also not talking about setting standards based on bank balance, portfolio size, or net worth.

We're discussing the habits that a person displays with regard to their treatment of money.

Do they spend without regard, mindlessly throwing down their credit card at any impulsive whim that strikes their fancy?

Or are they miserly, refusing to spend money on even the most basic goods, and leaving restaurant tables with only a 10 percent tip for the server?

Do they brag about their investments, telling war stories about how they jumped in and out of the market a dozen times in the last week? That they base every move on some "hot tip" they read online or see on TV?

Do they gloat about the idea that they'll "soon" be making double-digit returns, just as soon as this next get-rich-quick scheme comes to fruition?

Or do they stare at you blankly the moment that you casually mention your 401(k) account? After an awkward silence, do they ask you what on earth that strange combination of letters and numbers mean? And when you explain that it's a retirement account, do they scoff at the idea of saving for retirement at your age?

You Need to Be Aware of Financial Incompatibility

These are strong symptoms of a fundamental incompatibility — not around money, but around your worldview, values, and vision for the future.

This isn't about money. The other person's treatment of money is the symptom. But their wildly-different-worldview is the problem — or at least, the incompatibility.

If you're a saver and a conservative-to-moderate investor, there's a strong chance that your worldview and priorities include planning for the future, delaying gratification, and making logical, well-reasoned decisions based on data.

It's no surprise, in that circumstance, that a relationship with someone who's impulsive, makes erratic and emotional decisions, lives in the moment with zero regard for the future, and whose bank balance is prone to wild swings may not be compatible with you.

Sure, those character traits may not manifest in the way that the two of you handle your finances. But the underlying issue isn't the money itself; it's the fact that you hold different visions, habits, and practices for how you manage your lives.

While opposites attract, and opposites can sometimes counterbalance one another, people who are too opposite may have a tough time combining their lives and futures together as a singular unit.

The Problems Financial Incompatibility Can Create

In other words, it's not shallow to view financial habits as a relationship red flag, because the issue isn't the partner's net worth — it's the partner's priorities.

If you spot a red flag, it's better to face this warning sign at the beginning of a relationship, before it becomes a bigger issue in your life.

According to a CNBC report, finances are the leading cause of stress in long-term relationships, with 35 percent of respondents saying that money is a major source of conflict within their relationship.

The issue appears to become worse as couples get older, with 44 percent of respondents between the ages of 44 to 54 stating that money is the single biggest cause of conflict within their relationship.

While the survey didn't measure why financial conflict is more highly reported in that age bracket, here's one hypothesis: couples over 40 need to deal with a huge array of financial obligations. Many have a mortgage, children, college savings, retirement savings, health bills, and possibly other debt.

The result? There's a chance that the financial conflict could actually reflect an underlying conflict about priorities. What's more important: paying for those horseback riding classes that the children desperately want, or saving for their college education?

Another possible reason that people ages 44 to 54 report such high conflict levels? It could be that the stakes are higher. People's incomes tend to rise over time as they develop work experience and gain promotions. An undesirable financial habit that may not have raised alarms when it only affected a small amount of money might cause arguments when it impacts a larger sum.

The Classic Saver/Spender Imbalance and How It Impacts Your Relationship

Almost half of the survey respondents — 47 percent — stated that they were in a relationship that had a saver/spender imbalance, meaning that one partner was a saver while the other was a spender. In other words, nearly 1 in 2 couples say that they have different spending and saving habits.

Of course, different habits can be a blessing. The spender may encourage the saver to relax and enjoy the moment. Likewise, the saver may encourage the spender to think carefully about the future, create detailed plans, and refrain from momentary impulses. This balance can be healthy.

But if one partner holds serious concerns about their retirement plans, debt level, or the cash reserves in their joint bank account, and the other partner dismisses these worries and continues to spend wildly, this saver/spender tension can boil over into serious relationship turmoil.

Hiding Purchases Is a Huge Issue in a Relationship

That disconnect in worldviews might be one of the reasons why some couples hide financial transactions from one another. Nearly 20 percent of survey respondents said that they've made purchases of $500 or more — and then kept the purchase hidden from their partner.

If that doesn't alarm you, this next statistic might: according to the CNBC report, 6 percent of respondents said that they maintain a "secret" credit card or bank account that their spouse or partner isn't aware of.

In fact, a different CNBC report puts a specific number to this data: 7.2 million Americans, comprised of 4.4 million men and 2.8 million women, maintain a secret bank account or credit card that their spouse or partner doesn't know about.

This data reflects only couples who live in the same household and view themselves as "together." It doesn't include, for example, couples who have separated but aren't officially divorced-on-paper.

Financial Incompatibility Can Result in Divorce

Speaking of divorce, the same report cited a longitudinal study of 4,500 couples conducted by Kansas State University in which the researchers found that "arguments about money was by far the top predictor of divorce."

Meanwhile, a survey of 200 financial analysts who specialize in working with divorce cases found that money-related conflict was one of the top three causes of divorce, along with infidelity and basic incompatibility. (And as we've discussed, "basic incompatibility" and financial incompatibility may be related.)

Given this bleak glimpse into the lives of couples who argue about money or hide their financial transactions from one another, it's no wonder that nearly 3 in 4 respondents say that they now believe it's "moderately or highly important" to find a mate who holds a similar approach to money management and budgeting.

So, Is It Okay to Have Financial Deal-Breakers?

That leads us back to our previous discussion — is it okay to decide that certain financial habits or attitudes are relationship deal-breakers, particularly if you're "just dating" or in the early stages of a relationship?

You're the only person who can answer that question for yourself. But given that financial stress is one of the top triggers for both divorce and relationship conflict, there are strong arguments in favor of establishing money-related relationship deal-breakers.

Although this conversation has mostly focused on the saving and spending attributes of day-to-day money management, you may want to also consider your personal "deal-breaker" parameters relating to investment styles.

An Example of Financial Incompatibility With Investing

Imagine, for a moment, that one partner is a risk-averse investor. They prefer to keep their long-term savings in bonds and Treasury bills. They feel queasy about the notion of market volatility, and — regardless of their age or timeline — their investment goals center around wealth preservation rather than wealth accumulation.

Next, imagine a moderate investor. This is a person who is more comfortable with volatility, who embraces a larger equities allocation, who wants reasonable exposure to small-cap funds and alternative asset classes, and who has growth-focused investment goals. They rarely buy individual stocks, but when they do, they base their decision on fundamental analysis and hold that stock for years.

This moderate investor might have a tough time finding financial harmony with a risk-averse partner — but these contrasting worldviews don't need to be a deal-breaker. This might be the classic case of "opposites attract" in a healthy way.

These two could create joint financial plans together. The moderate investor could encourage the conservative one to take reasonable risks. And the conservative investor could warn their partner if a particular idea or investment seems too risky.

This couple might find a great balance. They may even discover that they're stronger together.

But what if a conservative investor started dating someone with a more extreme philosophy?

Imagine that the risk-averse investor started dating a highly aggressive investor. Let's say that the aggressive investor wants a 100 percent equities exposure. They dismiss the standard advice about asset allocation; they believe they can earn more through all equities and don't mind the wild swings that their portfolio might encounter along the way.

In fact, they're not even a proponent of mutual funds or index funds. They enjoy individual stock selection. They've ventured into exchange-traded notes (ETNs), they trade currency and commodity futures, and they're willing to make large bets based on technical analysis.

Do you think a relationship between this type of aggressive investor and a highly conservative investor could work?

Probably not. Their relationship would need an immense amount of compromise and collaboration – and even then, it might fall apart at the next market crash.

This is a case where "opposites attract" but can't co-create a shared future together. At least, not a future that involves joint finances.

What a Healthy Relationship Should Look Like

What does this mean? A healthy relationship requires that both people share the same values, vision, and habits around not only spending vs. saving, but also investing styles.

That sounds like a tall order, doesn't it? I mean, finding a mate who has the same ideas about budgeting as well as investing? You might wonder if that's possible.

But don't worry. You and your partner don't need to see eye-to-eye on every detail. In fact, it's better if you don't.

What matters most is that your general vision about how you manage your finances is "within range" of one another.

It's okay if one person is a slight spender while the other leans towards frugality. It's okay if one person invests a little more aggressively, while the other is more restrained.

You don't need to be identical financial twins. As long as the two of you share the same bandwidth — as long as you're not too far apart on the risk spectrum and spend/save spectrum — there's a strong chance that you'll work out.

In fact, your relationship may even become richer for it.