The financial pitfalls of love
Not being open and honest about money can lead to relationship problems.
Intimacy is usually a delightful part of any relationship. But can things get too intimate? Oh yes, when filthy lucre raises its head couples often become uncomfortable.
Okay, perhaps comparing credit reports on your first date isn't a great idea. But as any relationship moves along, and especially before you commit to living together or walking down the aisle, it is important to get up close and personal with the money side of life.
Granted, it isn't easy. Money can be even more personal than sex. In fact, couples make a habit of hiding financial details. In a joint 2011 Today.com and Self.com survey on financial infidelity, 56 per cent of women and 37 per cent of men admitted to lying to their partner about money.
Women clearly have more difficulty being open about money. The survey revealed that women were twice as likely as men to hide purchases or receipts.
Susan and Manuel's experience is an object lesson. I worked with the couple in 2008. They had kept their finances separate during three years together and had little knowledge about each other's financial past.
Susan and Manuel decided to get married, start a family and look for their first home. They found a beauty in the rough — a fixer upper in a good neighbourhood, close to schools and two blocks from a community park.
Both were eager to renovate and add value to their find with lots of sweat equity over the years. They made an offer in a competitive market with no conditions save financing. They had good jobs and could easily carry the mortgage at the going rate.
The bank loans officer ran the numbers and did a standard credit check. Up popped some dark secrets. Susan had $18,000 in delinquent student loans together with a number of bills in collection. She had also guaranteed her brother's car loan a few years back. After a job loss, he had been paying erratically which, of course, reflected on her.
The result? Tension, recriminations! They bought the house but were forced to borrow from a higher interest lender.
Given that financial stress is a leading cause of marital discord and breakups, it only makes sense to bring one's money life out into the open. It isn't good enough to admit you've been, "a bit bad with my finances."
Money can easily make us feel ashamed. That was the case for Susan, who thought that time would take care of it. There wasn't enough time, however. The higher interest rate mortgage put pressure on their cash flow, the dream house didn't get renovated and by the time the baby came along their family finances were in such a state that they had to sell their home and move to a cheaper condo. It all unravelled from there. In the end this couple foundered on the rocks of high debt and stress. Divorce followed.
Sharing your credit report is a good way to get a snapshot of your best beloved's financial life. A long history of delinquent bill payments, for example, could make you wonder how your joint finances will fare.
Also, if the report indicates that your partner's life is messier than the average garage it is probably going to affect your relationship. You might be willing to work on financial problems, but when a bill collector or Revenue Canada comes calling many people find their stress meter redlining.
Of course, couples should also focus on the present. Establishing spending guidelines is a great way to keep the money conversation flowing. The Today.com\Self.com survey showed that 36 per cent of the 22,000 people who responded were comfortable spending up to $99 before consulting their partner. However, 28 per cent were more comfortable checking out every single personal or family purchase. At the other end of things, six per cent didn't reveal any aspect of their spending to their partner.
It doesn't really matter how you lay out your financial life in a relationship. What's important is that each person agrees with it. And, of course, the litmus test for financial strength in a relationship is having enough trust to admit a money mistake.
Money has a way of making fools out of all of us — at one time or another. As long as you can talk about it solutions can be found.
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