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Everyone has different beliefs and values about money, and when couples don't agree on how to manage their finances, it can create tension. In fact, money is considered a top source of conflict in many relationships. Because the way you manage your finances affects so many areas of your life—from the interest rates you qualify for to your ability to retire comfortably—getting on the same page with your partner is crucial.
But how do you know if the two of you are financially compatible? Here are seven signs, plus some tips if you don't (yet) see eye to eye on the best way to manage your money.
1. You Have Similar Financial Goals
When you and your partner think about the future, do you both envision buying a single-family home in a good school district, helping your kids pay for college and building a solid nest egg for retirement? Or does one of you want to rent a tiny apartment until you can scrape together enough to buy an RV you can live in while traveling the country and working remotely?
If you and your partner have vastly different financial goals, it could spell trouble down the road. On the flip side, sharing similar goals could make managing your finances much simpler. It's best to discuss what you want your financial future to look like at the beginning of your relationship to determine whether your visions are aligned. If they aren't, you need to decide together if one or both of you are willing to compromise.
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2. You Save and Spend Similarly
You and your partner don't have to agree on how to allocate every cent you earn as long as you're generally aligned on what's most important to you as a couple. For example, let's say you both contribute a portion of each paycheck to your employer-sponsored retirement plan. One of you saves 10% while the other saves 15%. That's probably not a dealbreaker. However, if you're putting away 15% of your salary for retirement, and your partner isn't saving anything, that could be a red flag.
3. You Communicate Openly About Money
Being able to communicate openly with your partner about money is crucial. Even if you don't always agree, you should be able to discuss your finances without having the conversation turn into a shouting match. And you should never hide your spending from each other. It can affect your financial health and create distrust in your relationship.
Because the way you spend, save and invest may evolve over time with the natural ebbs and flows of life, it's important to set a foundation of open and honest communication early in your relationship. If you get comfortable discussing money now, you'll be better prepared to handle the financial impact of more significant life events you may experience in the future. This may include a job loss or promotion, the birth of a child, an illness or injury, caring for elderly relatives, receiving an inheritance and more.
4. You Agree on How to Manage Debt
Having some debt isn't necessarily a bad thing. After all, a well-timed loan can help you get a new set of wheels to take you to and from work or purchase the home of your dreams. However, you and your partner should agree on the type of debt you're willing to take on, how much you're willing to borrow and how you'll manage it.
For example, you may not have a problem carrying a credit card balance from month to month, but your partner may insist on paying it off every month. Or perhaps you want to make extra mortgage payments each year to pay off the loan faster, but your partner wants to invest the extra money for retirement. Different approaches to managing debt have different financial consequences.
Having similar approaches could be a sign that you and your partner are financially compatible. If you're not on the same page, you need to work through your differences and agree on how best to manage debt moving forward.
5. You Agree on Merging Your Finances (or Not)
You and your partner agree on the importance of saving for a rainy day. You're consistently investing for the long term. And you see eye to eye on how much you should spend on life's essentials and luxuries. But how will you decide who pays for what and whether you'll join your financial resources or maintain separate accounts?
There is no right or wrong answer, but if you believe being a couple means sharing everything, including bank accounts, and your partner thinks you should each have your own, you'll need to decide what works best for you as a couple.
If long-term happiness is your goal, commingling your finances may be the better bet. Research from the Indiana University Kelley School of Business suggests that couples who combine their finances are generally happier than those who don't.
6. You Understand Each Other's Credit Scores
It would be wonderful if you both brought 800-plus credit scores to your relationship, but different credit scores don't necessarily mean doom and gloom. Understanding why your partner's credit score is what it is may be just as important as having similar scores. For example, let's say one of you has less-than-stellar credit because of a simple mistake you made while learning to build credit responsibly or a medical crisis that resulted in unexpected bills. That's likely a temporary blip that can be improved with consistent positive behaviors like paying your bills on time and applying for credit sparingly.
Conversely, if you have excellent credit and your partner's is subpar because they live outside their means and fund their lifestyle with high-interest credit cards, that's a problem. It may be a sign that you're not financially compatible unless they're willing to make some major changes to how they manage money.
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7. You Discuss Large Purchases Before Buying
You probably wouldn't buy a car or a boat without discussing it with your partner first. But what about a $500 pair of jeans or $1,000 concert tickets? Talking about every purchase before you make it isn't practical, but discussing and agreeing upon a spending threshold is a good idea. A spending threshold is the most you or your partner can spend on a single item without discussing it together first.
For some couples, that may mean not buying anything over $100 without checking in first. For others, it may mean not spending more than $1,000. The exact number isn't important as long as you're both comfortable with it, agree to it and honor your agreement.
The Bottom Line
Even the most well-matched couples don't agree on everything. If you and your partner disagree about money from time to time, that doesn't mean your relationship is doomed, especially if your overarching money philosophies are similar.
However, if your money management styles, financial goals and views on communicating about money are significantly different, both of you will need to decide if you're willing to make some changes to bridge the gap. If not, it may be difficult to manage your financial life together, as a couple, long term.