When looking for red flags in a partner, what about financial red flags? Those that can easily be overlooked yet create a lot of trouble later on. When it comes to relationships and marriage, money can be a tricky subject. However, it’s not a topic you want to leave to chance! According to eMoney, 1 in 5 cohabiting or married couples in America cite money as their primary relationship issue. So, let’s avoid becoming a statistic and instead dive into the top financial red flags to watch out for and how you can address them.
Possible red flag #1: Living beyond their means
It’s easy to get swept away by a partner who appears to have it all – luxury vacations, 5-star dining, and all the latest Apple gadgets. But don’t be fooled by the external allure. This is a major red flag if their lifestyle doesn’t match their income. What could this look like?
- Constantly Using Credit Cards: If your partner is constantly using credit cards for everyday expenses, it could be a sign that they’re living beyond their means. When used smartly, credit cards can have great perks. But if they’re not paid off monthly, it’s a big, bright flag and worth inquiring about.
- No Savings or Emergency Fund: Not having any savings or an emergency fund can indicate poor financial planning and a lack of foresight. The key question should be, why? What’s the alternative plan?
- High Debt-to-Income Ratio: This just means they have a lot more debt than they earn. If a significant portion of their income goes toward paying off debt, it suggests they might be in over their heads financially.
While it’s okay to splurge occasionally, consistently living beyond one’s means can lead to financial ruin for your partner and your relationship. The key is to communicate before jumping to conclusions. After all, there may be reasonable explanations for the above.
Possible red flag #2: Unwilling to have financial convos
Money is often considered taboo, but avoiding financial conversations altogether is a big red flag. Transparency is key in any relationship, especially when it comes to finances. Let’s take a look.
- Evasive About Financial Details: If your partner avoids discussing their financial situation or gets defensive when the topic arises, this is a sign that they may be hiding something.
- Unwillingness to Set Joint Financial Goals: A reluctance to set and work toward joint financial goals can indicate a lack of commitment or differing financial priorities. Money is the great equalizer, so if you want to truly know someone’s love or commitment in the relationship, discuss finances.
- Secretive About Spending: Financial infidelity is a real issue. If they frequently make large purchases without consulting you or hiding receipts, it’s a major warning sign and not to be overlooked.
Healthy relationships are built on trust and transparency, and the same must apply to your finances. Make sure both of you are comfortable discussing your financial histories, current situations, and future goals. You aim to be on the same page, not different financial books!
Possible red flag #3: Irresponsible financial behavior
Everyone makes mistakes, but a pattern of irresponsible financial behavior can spell trouble for your relationship’s future stability. Remember, no one is perfect, so again, communication here is key.
- Frequent Late Payments: Regularly missing bill payments can indicate poor money management skills and a lack of forethought.
- Impulse Spending: Consistent impulse purchases can lead to unnecessary debt and financial strain. A habit like this is a character trait that takes some work to change, but it is by no means impossible.
- Gambling or Risky Investments: Engaging in gambling or making risky financial investments without thorough research can jeopardize your financial future and throw away life savings in a heartbeat. Investing is about making smart decisions about your future, not impulsive, exciting money moves.
It’s key to recognize the signs of irresponsible financial behavior in your partner early on and discuss them openly together. Be inquisitive without being judgmental. Change is possible if it’s desired. For more information on how to effectively communicate with your partner about money and debt, check out this article: Our Debt Confessions: Talking Openly About Money Before Marriage.
Possible red flag #4: Poor credit history
A poor credit history doesn’t necessarily mean your partner is irresponsible, but it’s important to understand the reasons behind it and how they plan to improve it. While their credit history doesn’t impact yours, it will have implications for you if you plan to take out loans together in the future. Here are some key points to be aware of:
- Low Credit Score: This can affect the ability to get loans, mortgages, and even affect job prospects.
- Bankruptcies or Foreclosures: While these can be the result of past mistakes or unfortunate circumstances, it’s crucial to understand the context and what steps have been taken since.
- High Amount of Debt: Significant debt can affect your partner’s ability to contribute to joint financial goals and cause relationship stress.
Understanding your partner’s financial history helps you better plan your future together. Rather than judging the situation, perhaps you’ll find it more useful to discuss their plans to improve their credit score and manage debt.
Possible red flag #5: Inconsistent employment history
Income stability is clearly important for financial security. An inconsistent employment history may be a red flag that impacts not only their financial stability but yours as well, long term.
- Frequent Job Changes: While changing jobs for better opportunities is often smart, too frequent of changes without a clear career progression can be questionable.
- Periods of Unemployment: Extended periods of unemployment without a plan to secure income can lead to financial instability. Get curious about their decision-making process for this.
- Lack of Long-Term Career Goals: One of the biggest red flags is not having a clear career path or long-term goals. It often matters less where someone’s been and more where they are heading—as long as it’s not all talk and you can see them taking action.
If you’re interested in getting to know your partner, discuss their career aspirations and plans to ensure you’re both working towards a stable and secure future.
Possible red flag #6: Lack of financial independence
Financial independence is crucial for a healthy relationship. Dependence on others for financial support can strain your relationship as someone else is pulling the strings. Here are some examples to watch out for:
- Reliance on Family for Money: If your partner frequently borrows money from family or friends, it can indicate a lack of financial independence.
- No Personal Savings: Not having personal savings suggests they’re not preparing for the future. At a minimum, you’ll both want 3-6 months of an emergency fund saved to cover essential costs.
- Dependent on You for Financial Support: If they expect you to cover most expenses, it can lead to an imbalance in the relationship. This may be a red flag, but regardless, it’s worth checking how you feel about it.
If you or your partner is currently dependent on others and lacks personal financial independence, discuss ways you may plan to change that and work towards building savings and reducing dependency on others.
Frequently Asked Questions (FAQs) about financial red flags in a partner
Let’s discuss some more questions on this topic below.
Q: How do I approach a conversation about finances with my partner?
A: Start with a non-confrontational approach. Choose a relaxed setting and emphasize the importance of transparency and teamwork in achieving financial goals together. Start with a money date here.
Q: What if my partner gets defensive about financial topics?
A: Remain calm and patient. Explain that discussing finances is about building a secure future together, not about blame or judgment.
Q: How can we set joint financial goals?
A: Identify common goals, such as saving for a house or a vacation. Create a budget and savings plan together to work towards these goals.
Conclusion
It’s easy to get swept up in the romance of new love, so bookmark this article and check whether it’s green for go or if you’ve started to collect red flags. Money matters can be sensitive, but addressing financial red flags early on can save you from future heartache and financial strain. By beginning with open communication and working together towards financial stability, you can build a strong foundation for a lasting relationship and a financially successful one, too. Remember, the key to overcoming financial red flags is mutual understanding, communication, and collaboration.
Laura Tynan is the founder of The Witch of Wall Street, a personal finance and investing community, where women are shown how to manage, multiply and manifest money, using simple strategies. Laura holds a BSc Hons in Finance, is a Chartered Accountant, and is certified in EFT Tapping, Breathwork, and RRT. She has been recognized by the Financial Times as a Top 20 Future Female Leader and by Yahoo! Finance as a Global Champion of Women in Business. She is a multi-award-winning speaker who has spoken at, and been featured in, Forbes. Laura hosts The Witch of Wall Street podcast and is the author of the personal finance and investing book for women, by the same name, which is available now on Amazon.
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