Don’t let debt be the elephant in your relationship.
Most of us have had to deal with debt at some point in our lives, yet it still seems to be one of those taboo subjects no one wants to talk about – whether with friends, family or romantic partners. All the while, it may be more common for couples today to enter into relationships with debt, from student loans, credit cards or loans for large purchases like cars or homes. Whatever each party’s situation may be, being up front early on can help you both to avoid unnecessary financial and personal conflict down the road.
Financial stress and disagreements have long been cited as leading causes of tension in relationships. Wealth is a highly personal matter touching all facets of our lives, so it’s not hard to understand why differences could hurt a relationship. Establishing an open line of communication when it comes to managing wealth is important – not only for your financial well-being – but for your relationship, too.
Especially with a spouse or romantic partner, being open with each other about your financial histories and debt – including past mistakes – is crucial to your combined long-term success and a comfortable retirement. Not doing so could lead to a variety of complications down the road including bad credit, trouble getting a loan or a less-than-ideal retirement.
Beyond being forthcoming about your financial standing, it’s also worth noting that most of us have different ideas of what is normal or acceptable in terms of how we manage our finances and debt, or have different outlooks on what the future should hold. For example, while one partner may be comfortable renting an apartment for several years, another may be eager to become a homeowner. If one of you is carrying a lot of credit card or other debt, it could be more difficult to get a loan for such a purchase.
That being said, don’t forget that not all debt is necessarily “bad” debt. While credit card debt typically comes with a high interest rate and should be paid off as soon as possible, other loans including student, car or home may have lower interest rates and can even improve your credit score as long as you make regular payments. In those cases – rather than trying to pay them off as soon as possible – it may make more sense to take more time to ensure you’re able to keep investing and reaping returns. Taking a coordinated approach to your finances while in a relationship truly relies on having an accurate understanding of what your entire financial picture looks like – debt and all.
The good thing about having a partner who is on the same page financially is that you benefit from a support system and accountability partner. Just as many people have a gym buddy to help encourage them to stick with an exercise regimen, having someone who understands your financial goals – and weaknesses – can help you stay on your path toward a bright financial future.