While imagining a life together, one in four couples identify money and finances as the greatest challenge to their relationships. Wells Fargo Managing Director and Senior Director of Advice Emily Irwin joins Yahoo Finance to discuss the red flags to avoid in a partner — especially before opting to share a joint bank account — which includes their spending habits, ignoring outstanding debts, and even financial secrecy.
“Behaviors like gambling — we just came off Super Bowl weekend — this can be a real indicator about… risk tolerance,” Irwin lists. “Throwing down some money on whether or not Taylor Swift is there, not a bad idea if you’re spending your coffee money. If you’re spending your rent money, that’s a problem.”
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Editor’s note: This article was written by Luke Carberry Mogan.
Video Transcript
– More than one in four couples identifying money as their greatest relationship challenge according to a recent study by Fidelity Investments. However, as you work through financial indifferences, there are some warning signs worth a double take. Here to discuss is Emily Irwin, Wells Fargo Managing Director and Senior Director of Advice. Emily, thank you so much for joining us.
You told us that some of the red flags to look out for when you think about your finances. Can you tick through some of the top that come to mind?
EMILY IRWIN: Absolutely, thanks for having me and Happy Valentine’s day to everyone. So some of the big red flags that we see in relationships include things like financial secrecy. So this is really the red flag where someone is just not being transparent with their finances. It could be on their spending. It could be that they’re hiding a debt on their balance sheet.
It could be that they are not willing to discuss what even their career goals are with their partner. Another one would be taking on debt and just pretending it doesn’t exist. And not all debt is bad debt. It could be that you’ve invested in yourself, you’ve taken on student loans, it could be that you’re saving for a big purchase and you’ve taken out a mortgage or maybe an automobile to drive to that job that you need to get to.
However, if you have no plan to pay it off or you’re just pretending it’s not there, major red flag, also behaviors like gambling. We just came off Super Bowl weekend, this can be a real indicator about risk tolerance. Throwing down some money on whether or not Taylor Swift is there, not a bad idea, if you’re spending your coffee money. If you’re spending your rent money, that’s a problem. And then finally, prioritizing wants over needs.
Everyone should prioritize some splurge in order to maintain financial goals and good behaviors. But if you’re doing that consistently and you can’t pay off your monthly bills, then that’s going to be a problem.
– So Emily the one that got my attention is a potential red flag was gambling or betting, because a lot of people Emily, they like sports betting and buy a lot of people, I mean, me. So when exactly is that Emily, a red flag, a caution, is it the amount you’re spending? Is that it?
EMILY IRWIN: It’s actually not the amount. You want to think about what you’re spending in alignment with your goals. And for someone, it might have 1, 2, 3 zeros, that may not be something that’s problematic. If they can support it within their lifestyle and their budget, it is a problem if it affects things like you being able to make on time payments of your bills. If for some reason it starts affecting your credit score.
If for some reason, it gets to the point where you’re not even sharing those behaviors with your loved one and your partner, that’s where the red flag comes in. Because that means you’re starting to hide things that can not only affect your financial picture but potentially your partners as well
– Yeah. Emily, the one that got me was financial secrecy or hiding things from your partner when it comes to your finances, what would be your advice to someone who might not feel comfortable discussing their credit score for example, with their partner?
EMILY IRWIN: Yeah. I think it depends on where you are in your relationship. Early on, you can do things like observe behaviors and think to yourself like how does this person interact with their finances, you can ask about their money story. You can ask about– to tell them about like all the things you want to do in a relationship. Tell me about yourself, share what your money story is and your history. So it invites them to do the same.
If you’re a little bit further within the relationship, definitely, before you take on any joint purchases or co-mingling of assets. You want to have a really transparent conversation about the big things, saving, spending, debt. How are we going to check in with one another? A wonderful way to do it, it’s Valentine’s Day. Do it over a date night, in a place that’s not going to be something that’s emotionally charged.
You both know you’re coming into that conversation, you know what the topic is, and therefore, you’re going to be able to be in an environment where you can have a more transparent less emotional conversation.
– All right those are good tips financial and otherwise. Emily, thank you so much for joining the show, I appreciate it.
EMILY IRWIN: Thank you.