Financial red flags in a relationship

So your relationship is going great. But have you talked about money yet?

Serious topic alert! Money is one of the most significant causes of conflict in relationships. It is a sensitive topic and one that can lead to misunderstandings and arguments. A lot of us have complex feelings around money which we bring to our relationships.

Identifying financial red flags can help address issues and avoid conflicts that can be a source of stress and tension in a relationship.

While it might be a difficult conversation, failing to address red flags early on could lead to financial stress down the track or worse, red flags can lead to financial abuse- an insidious form of domestic violence with long-lasting consequences.

Here are some financial red flags in a relationship and how to spot them:

A lack of healthy fundamentals

The way you deal with finances can look different in any relationship, but healthy fundamentals are always the same:

• Open communication
• Establishing fair boundaries
• Equality
• Transparency
• Respectful conversations

While no relationship is perfect, if you have a wobbly foundation, you might be in red flag territory.

A vow of financial secrecy

If your partner is secretive about their income, expenses, or debts, it can be a red flag. Hiding financial information can be a sign of financial irresponsibility, and it can also indicate a lack of trust in the relationship. While we all have a right to privacy in a relationship, if you are considering big decisions like purchasing a home together, openness around financial matters is important.

Going on a spending spree

Overspending is a significant financial red flag, especially if it is spending on non-essential items. If your partner is constantly splurging on things that they do not need, it can lead to financial problems in the future. Buying extravagant gifts for you, especially if your partner has limited funds is another red flag. It might be meant as a kind gesture but if it contributes to overspending, it could become a problem.

The art of bill dodging

If your partner is frequently avoiding bills or paying bills late, it can be a sign of financial irresponsibility. Late payments can also lead to late fees and damage to credit scores, which can have long-term consequences. They might be simply disorganised and need help to set up automated payments for bills or they might be struggling to make ends meet.

Living a debt-filled life

High debt levels can be a significant red flag in a relationship. Outstanding credit card balances; BNPL late fees or substantial personal loans are things to look out for. It can indicate a lack of financial responsibility, poor budgeting, or overspending. High debt levels can also lead to financial stress and strain on the relationship. It can also get tricky if you decide to purchase a house together and need to approach a lender for a loan.

So, what should you do if you spot any of these financial red flags in your relationship?

Have a heart-to-heart

The first step in addressing any financial red flag is to talk about it. Communication is key, and it is essential to have an open and honest conversation about your finances. We all have our financial fumbles, talking things through is a great start to building a healthy financial relationship.

Tell it like it is

Honesty is essential in any relationship, especially when it comes to finances. Be honest about your financial situation and work together to find a solution.

Make a financial bucket list

You might have your own personal money goals which is fantastic. You could talk about setting some shared financial goals with your partner and develop a plan to work towards achieving them. This can help to focus your finances and give your money dreams a to-do list.

Give your money a job description

Creating a personal budget or a shared one can help to manage your finances and avoid overspending. Make sure to include all income and expenses and allocate funds for savings and debt repayment. Check out Bank of us online budget planner.

Get some financial back-up

If you’re feeling overwhelmed by your financial situation, seek professional help. An independent financial advisor or counselor can provide guidance and support to help you manage your finances. Just talking to another person can help bring clarity to your situation. Getting professional advice early on can avoid big problems later and help you set sail to financial success.

Plant small seeds of success

Financial red flags can be a significant source of stress and tension in a relationship. While it might feel awkward, it is best to identify them early and take action to address them. View the conversation in a positive light- it’s an opportunity to reset and make a fresh start.

You don’t have to fix everything all at once, taking small steps can make a big difference to your confidence around money. Communication, goal-setting, budgeting, and seeking professional help can all help to manage your finances and contribute to a healthy relationship.

A note on financial abuse

Financial abuse happens when someone is excluded from financial decision-making or restricted from accessing money that is rightfully theirs. If you or someone you know is experiencing financial abuse, reach out to national domestic, family, and sexual violence service 1800 RESPECT for support.

There are also more resources available on the moneysmart.gov.au website

Please note this information is general in nature and does not take into account your personal circumstances or objectives. You should consider this before acting on any of the information contained.