You're seeing someone new. You've been on a few dates and everything seems to be heading in the right direction. 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.
Is it OK to have financial deal breakers when it comes to romantic relationships?
Decide 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. A few examples:
- 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% 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? Do they base every move on some "hot tip" they read online or saw 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)?
The Problems Financial Incompatibility Can Create
According to a Ramsey Solutions survey, money is the most common issue married couples fight about. Further, about a third of respondents who said they fought about money with their spouse also reported having hidden a purchase from their partner because they feared disapproval.
On the other hand, 87% of survey respondents who described their marriage as "great" said that they worked with their partner to set long-term financial goals, compared with 41% of respondents who deemed their marriage "OK" or "in crisis." Respondents in "great" marriages were also more likely to report talking about money with their spouse at least once a week. In other words, they were better able to communicate about finances, as well as to set mutually beneficial goals.
Unsurprisingly, other research has shown that arguments about finances are stronger predictors of divorce than other kinds of disagreements.
What Finances Reveal About Our Priorities
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.
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 single unit.
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 it at the beginning of a relationship, before it becomes a bigger issue.
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% 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.
Do you think a relationship between this type of aggressive investor and a highly conservative investor could work? Maybe 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.
Is Compromise Possible?
The good news is that 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 OK if one person leans toward spending while the other leans toward frugality. It's OK 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.