A red flag says “something isn’t right, proceed with caution.” In a relationship, financial red flags can be a harbinger of tough times. It’s important to deal with them promptly, ideally before your future is too deeply commingled with your partner’s.
Addressing a financial red flag may sound scary, but it can be a positive experience if both parties are willing to work on it.
Take a look at these five financial red flags; do any of them seem familiar? If so, it’s time to take action.
1. Refusing to talk about money
“Money consistently is reported to be the top stressor in everyday people’s lives,” Maggie Baker, Ph.D., an author, money psychologist and senior associate at Canada’s Financial Resilience Institute, said in an email. “Because there is so much cultural and social taboo about being open to the reality of one’s finances, it remains in the shadow of many people’s consciousness.”
While asking for bank statements on the first date might be inappropriate, it’s not unreasonable to discuss money matters with someone you truly care about. Planning a future together means communicating openly and being on the same page, financially and otherwise.
Refusing to talk about money might be a sign of a serious problem, such as hidden debts or not being ready for a committed relationship.
2. Frequent overspending
It’s natural to want to impress a potential partner, and gifts or outings are a common way to do that. But being overly flashy or demonstrative with money without the bank account to back it up can lead to big challenges later on.
If your partner lives beyond their means, and you find it concerning, it might be a sign that their values or goals around money are different from your own.
3. Using money to manipulate or shame
Watch out if your partner judges you or makes you feel ashamed about financial disparities (whether you are made to feel bad for having too little – or too much – money as compared to them).
Being shamed or guilted into paying for things because you have more money isn’t right, nor is being made to feel inadequate because you have or earn less money. In both cases your partner is not being supportive and understanding of your financial situation, and that’s a red flag.
4. Excessive consumer debt
A mortgage or student loans are one thing; excessive credit card debt is another. Borrowing money to make ends meet is also a red flag. These are signs that your partner is not fiscally responsible, and this can land you both in hot water down the road.
Marriage means you’ll take on their responsibility for their debt (and they yours) — past, present, and future. Try to ascertain whether their debt situation is an isolated incident or the result of ingrained behaviour before things get serious.
5. Keeping secrets or telling lies about money
The feeling of being financially out of control often leads people to hide aspects of their financial lives, Baker says. “If your partner is in better control you probably anticipate criticism rather than empathy, and that perception will motivate you to hide the truth both from yourself and your partner.”
Still, secrets and lies set a dangerous precedent for dishonesty in the relationship, which can drive a wedge between you.
What to do about financial red flags in a relationship
Open, honest communication is the antidote to most of the financial red flags above. It’s also easier said than done, especially if you or your partner struggle to speak freely about deeply personal or complicated things.
Baker says more new couples should ask each other, “Can you be honest and forthright about your total financial picture?” Gauging your partner’s willingness to be transparent can set the stage for easier money conversations later on.
If you bring a financial red flag up with your partner, and they hear you with an open heart and express a desire to work on it together, great. But if they deny or dismiss it or become argumentative, what will you do? Is this red flag big enough to be a dealbreaker?
Couples that find themselves at an impasse on a financial issue, but both want to work on it, should consider seeing a therapist who can mediate the conversation. Financial therapists in particular are well-equipped to help couples navigate these murky waters.
Once the lines of communication are open, it’s time to determine how you’ll move forward together. Every relationship is different; not all couples need to fully combine their finances or agree on every detail of the budget. In fact, some financial autonomy in a relationship can be good too, as long as it’s not secretive.
What’s important is that you and your partner set clear terms for how you’ll manage your finances. This means having practical conversations about day-to-day money management, as well developing financial goals together and creating a plan to get you there.
Money questions to ask your partner
Ready to talk about financial red flags? Start by setting a recurring “money date” when you both can spend at least an hour together without interruptions. In this time, answer the following questions together:
- What is our current financial situation? The more specific you are about your individual and combined incomes, assets, and liabilities, the better.
- What are our goals? Examples include buying a house, having kids, annual vacations, and going back to school. For each goal, set a time frame by which you wish to accomplish the goal, along with how much money you will need for it.
- How will we reach these goals? Break each goal down and create a financial plan to get there.
- What has changed since our last financial check-in? Seeing how you’ve progressed towards your financial goals can be motivational. Make sure to celebrate milestones along the way. Likewise, discovering you’ve gone in the wrong direction can be a cue to re-evaluate and adjust your goals. Or, it could be a sign of other financial red flags, which you can ideally address before they spiral out of control.
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