Love is in the air, but are your financial feet firmly on the ground?
For couples, talk of finances tends to come with talk of commitment, love, and long-term goals. Typically, each of us has a few strong financial characteristics. You may be dating or married to your financial opposite! We all tend to fall on one side or another in a few categories. We are either: A spender or a saver; a risk taker or a security seeker; and debt tolerant or debt intolerant.
One characteristic is not necessarily better than another.
Spender vs. Saver
What do you do with birthday or holiday gift money? The choice you make may indicate whether you are a spender or a saver. Savers look for every opportunity to keep money in their pocket, while spenders feel okay putting a few extra dollars towards convenience, luxury, or fun.
- Value freedom in your financial life?
- Order what looks good at a restaurant, regardless of price?
- Always drive your car even when walking or carpooling is an option?
- Shop without regard to sales or coupons?
- Value control and financial security?
- Always order water when out to eat because it’s free?
- Know exactly how much cash is in your wallet at all times?
- Only purchase an item if it is on sale?
Risk Taker vs. Security Seeker
When looking to save or invest money, there is a continuum of risk. Risky investments often have high rates of return, but also hold a certain level of uncertainty. You could “win” or “lose” money in these arenas, with the stock market being the most common risky investment. Then there are more secure investments. These are often guaranteed by the government and take time to mature.
- Enjoy wagers, gambling, or betting on odds?
- Get excited at the thought of high rates of return?
- Feel okay about potentially losing money in an investment?
- Follow and invest in the stock market?
- Enjoy instant success and gratification?
- Avoid playing the odds or games with your money?
- Have money put away in bonds, certificates of deposit, money market accounts, or standard savings accounts?
- Dislike the idea of potentially losing money in an investment or savings method?
- Have patience and the willingness to wait for your money to grow?
Debt tolerant vs. Debt intolerant
Individuals that maintain a sense of comfort surrounding debt are considered debt tolerant. These people feel comfortable carrying a balance on a credit card, financing large purchases, and paying down large mortgages or student loans. On the other side, individuals that are debt intolerant prefer to pay in cash, pay credit card balances in full each month, and feel uneasy borrowing money.
- Carry a balance on your credit cards?
- Always use financing options when making a large purchase?
- Take out a loan or use credit when you are short on money at the end of a month?
- Pay off your credit card balance in full each month?
- Save and then pay for large purchases in cash?
- Look for ways to cut spending when you are short on money at the end of a month?
So what does this mean for your relationship?
- Use the above questions to start a conversation with your significant other about your financial personalities.
- Develop up a money management system that works for you as a couple, focusing on your strengths and making a plan to compensate for your weaknesses and differences.
- A good monthly spending plan should meet all of your needs and some of your wants.
- Set goals together and make a realistic plan to reach them.
- Spend money on what you value as a couple or family.
- Financial conversations run better when it is about numbers, not emotions!