Yahoo Finance Ramit Sethi: Here’s the Key Sign You’re Not Financially Compatible With Your Partner
Money is a leading cause of strain in relationships, so it’s important that you’re just as financially compatible with your partner as you are romantically. Knowing whether you are fully financially compatible with someone can depend on many factors, but financial expert Ramit Sethi said there is one red flag that’s always a bad sign.
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Here’s what Sethi said to watch out for when it comes to money and relationships.
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Don’t Ignore This Red Flag
Talking about money isn’t necessarily fun or sexy, but if you are looking into a long-term future with someone, it’s a topic that must be discussed.
“If one partner will not talk about money, that is the most dire of circumstances,” Sethi told CNBC.
If someone is unwilling to discuss finances now, this will likely lead to more trouble for the relationship down the line.
“Money determines many things, like where you’re going to live, what you’re going to eat, how often you’re going out or if you will have children,” Sethi said. “Money cuts across everything.”
It’s so important to have open conversations about money with your partner because in some ways, your relationship is like a business.
“What couples don’t often realize is that you’re partnering up to run the business of a household together,” Sethi said. “Reframe the idea of having ‘a conversation about money’ to ‘we get to talk about money together for the rest of our lives and use it to build our rich life.'”
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How To Determine Financial Compatibility
Before discussing money with your partner, it’s important to have a clear sense of your own views first.
“Most people don’t have a strong personal vision about money,” Sethi said. “How can you know if you’re financially compatible with someone else if you don’t even know yourself?”
The questions you should ask yourself include, how much money do you want to have saved and by what age? How do you plan to get there? Are you comfortable with having some debt?
“Once you have that strong understanding of yourself, then you can work with your partner on how you two can align,” Sethi said.
How To Discuss Finances With Your Partner
Money can be a hot-button topic, so it’s important to handle these conversations with care.
“Make sure you start the conversation during a calm moment,” said Shelly-Ann Eweka, CFP, senior director at TIAA. “It’s likely to be too stressful if you start this conversation right after a big credit card bill has just arrived.”
Eweka recommends approaching conversations about both short- and long-term goals with a clear “why” in mind that you can both agree on.
“A couple with a clear understanding of why they are making choices today is more likely to stick to their long-term plan,” she said. “This strategy also can be helpful when pursuing shorter-term goals. If you both dream of taking a big vacation, sit down and plan how you can save for it together. It shouldn’t all be about what you can’t do, but how you can achieve something together.”
It may also be a good idea to get outside help.
“It can be helpful to sit down with a financial planner who can help you see the big picture,” Eweka said. “A professional can help you make a plan that you can both stick to.”
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