Want a happy relationship? Keep your personal finances in good shape
Finance columnist Mark Ting's tips on how to manage debt and relationships
According to a recent survey from Credit Canada, 33 per cent of Canadians have either ended, or would end, a relationship because of their partner's debt.
Dating someone with debt wouldn't be a deal breaker for me, however the amount of debt and their attitude toward it could be. When my wife and I began dating she had some debt but managed to pay it off before we were married. Had she done the opposite and refused to address her debt thereby letting it grow, it likely would have been a constant source of conflict between us. The pragmatic me would likely conclude that it's best to break up.
According to the survey I'm in the minority as 67 per cent of those surveyed said that they wouldn't let debt get in the way of a relationship. However, I wonder how many would change their answer if their partners were unfaithful — not romantically — but financially. Behaviours such as racking up credit card debt or taking out loans without a partner's knowledge are often relationship killers.
Transparency key to good relationships
It's best for couples to be transparent about their personal finances from the beginning so that if there is an issue with debt, they can tackle it together — or decide to break up. It's really up to each person and how serious they are about the relationship.
Assuming a couple decides to address their debt, the first step is to sit down together and go over household finances, establish goals, discuss their expectations, cut expenses and prioritize spending. An ideal time for this meeting is when both parties are relaxed and are in a good state of mind, such as on a weekend.
First, tackle your budget by locating "financial leaks." Some common ones are unused subscriptions, gym memberships, bank charges, ATM fees and interest changes. If you are wasting money on products or services that give you little in the way of value or joy, they should be the first to go.
Next, consider your habits or vices and find cheaper substitutions. For example, if you are foodie and good food brings you joy, you shouldn't have to eat instant ramen every day just to pay down debt, but you also shouldn't eat out for every meal. Instead cook great meals at home allowing you to enjoy good food while staying on budget. Other examples would be making coffee at home rather than going to Starbucks or cutting back on your alcohol or tobacco consumption.
Trim expenses, look for extra income
It is best to track all your spending using a household budget spreadsheet or a budgeting app such as Mint. Once you get a handle of where your money is going, you can make changes and redirect funds to debt repayment.
The next part of the plan is to increase your income. There are countless ways to bring in extra money particularly with the gig economy. In the past, I have rented out rooms in my house ($500-$1,000 per month), walked dogs ($750 per month), and upgraded my education in order to get a promotion. No longer does it "take money to make money" — many side hustles can be started with less than $100. A good resource is the Side Hustle School website and podcast.
Shortcuts such as counting on an investment in electric cars or cryptocurrency to skyrocket in value and set you free financially are a mistake. Developing proper money management habits takes effort, sacrifice, work and time, but will pay off in the long run.
If you need help sticking to your budget, subscribe to the Minority Mindset YouTube channel. The creator posts daily, provides some great advice and will help you stay motivated.
With couples and debt there must be some give and take. If you are great with money but your partner isn't, I wouldn't expect him or her to change overnight. It is their willingness and effort that counts. Tackling a problem together, and hopefully achieving your goals, makes a couple stronger — nothing solidifies a relationship like overcoming obstacles.
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