This Valentines day, we want to help couples avoid those awkward and potentially damaging conversations. Here are seven important questions every couple should discuss before taking the next big step, whether that’s moving in together or getting married, let’s cover love and money:
Love and money checklist – How much have you saved?
According to Murphy’s Law, if something can go wrong, it will—which is why it’s important to have a safety net. We recently surveyed 1,000 consumers and found that more than a third of those surveyed have less than $1,000 in their savings account, and more than half have less than $5,000. In addition, 60 percent said they don’t’ have the financial freedom to enjoy life. Ask your partner about the emergency resources he or she has, and if one or both of you haven’t started saving, commit to getting a plan in place.
Love and money checklist – How much debt do you have?
Being in debt can add stress to any relationship. The Prosper Marketplace study found that 60 percent of Americans have credit card debt, and while two-thirds of people regularly pay more than the minimum on their cards, they don’t pay them off fully. Many Americans also juggle other debts, like student loans, car payments, mortgages and medical bills. If you and your partner are on the same page, you can work together to create a financial plan for paying these off.
What’s your credit score?
If you’re planning to make a big purchase or take out a loan together, it’s important that both you and your partner have good credit. Knowing your partner’s credit score will also help you understand how they manage money, since credit, debt and payment history all factor into your credit score. Services such as Credit Karma allow you to monitor your credit and identify the areas you can improve.
How do you budget and save?
Everyone spends differently, so it’s no surprise that this topic can inspire disagreement. Perhaps one partner is a “saver” and the other a “spender,” or one wants a new car while the other wants to save for a European vacation. Online budgeting apps and modern financial planning tools like LearnVest make it easy for couples to share goals and keep track of spending.
What are your financial goals?
Do you and your partner have a 5 or 10-year plan? If so, are they aligned? These are important questions to ask, especially if you’re thinking of home ownership or hope to grow your family some day. The Prosper Marketplace study found that only 38 percent of Americans have a financial plan, although an additional 38 percent say they expect to create one in the future. Planning together — especially with dual incomes — will make easier to achieve these goals.
How are you planning for retirement?
The survey results also show that marriage encourages people to plan for the seemingly distant future. For instance, while 65 percent of married people say they understand a 401(k)—a common way to save for retirement—only 47 percent of single people feel the same. Other retirement options include opening mutual funds, investing in stocks, opening a high-yield savings account, or a combination. Regardless of what you choose, ask your partner what they’re doing to save so you can understand how that impacts your retirement prospects.
How do you envision sharing finances?
The decision to share finances depends on where you are in your relationship, as well as your personal preferences. While some couples pool the majority of their money into joint accounts, others opt to keep their accounts separate and split their expenses. Before you decide, research your options. Some routes, such as taking out a joint credit card, could have a negative impact on your personal credit if your partner racks up the bill.
While it’s not always easy to discuss finances, it’s important for a relationship’s longevity that both partners are on the same page. For instance, research shows that arguing about money can be a top indicator for divorce. The ability to have frank conversations about money is a skill that you’ll be glad to have honed — and this seven question checklist is only the beginning.
As always, if you’re interested in applying for a personal loan through Prosper, checking your rate will not affect your credit score.