How to spot financial red flags in a relationship, according to experts
Love is in the air this Valentine's Day, but it's not just about roses and chocolates. When it comes to relationships, finances play a crucial role in keeping things running smoothly.
Financial difficulties can really put a strain on romantic relationships. In fact, a recent study by Fidelity found that one in five couples said money is their biggest relationship challenge.
Drawing on their expertise in personal finance, Farzana Botha, the Communications Manager at Sanlam Risk and Savings, and Lee Hancox, the Head of Channel and Segment Marketing at Sanlam, have put together a guide to “relationship financial flags” to help South Africans navigate the complexities of love's financial dynamics.
"Understanding the financial red, beige and green flags in relationships can be the key to a financially healthy partnership, whether you're a newly-wed couple, long-time partners or navigating the dating scene.
“It's not just about avoiding pitfalls but also about building a foundation of trust and open communication that empowers couples to be financially confident and secure," explained Botha.
To promote healthier and more transparent relationships, Botha and Hancox share valuable insight on identifying financial flags that can impact the well-being of South African couples.
Financial red flags
According to Botha, financial red flags serve as warning signs that may indicate underlying issues in a partner's financial behaviours or attitudes. These warning signs encompass hidden debt, excessive spending, incompatible financial goals and avoidance of money discussions.
Learning to recognise these red flags early on is crucial for preventing future financial conflict, and seeking guidance from a financial adviser can help establish a healthy financial foundation for the relationship.
Hancox stresses the importance of couples openly addressing and finding solutions to these red flags. Taking action, such as creating a joint budget, setting shared financial goals or seeking professional advice, is key to overcoming these challenges.
Mutual understanding, trust and a collaborative approach towards common financial objectives are essential components for maintaining a healthy financial relationship.
Financial beige flags
Moving on to the "beige flags", which represent minor financial issues that warrant attention, Sanam Naran, a counselling psychologist and founder of Conscious Psychology, suggests honest communication about financial habits, goals and expectations.
Being aware of these subtle signs early on allows couples to prevent these beige flags from escalating into more significant issues.
As noted by Naran, individuals can also consider therapy to gain a deeper understanding of their attitudes towards money, thereby fostering self-awareness and promoting healthier financial dynamics within their relationships.
Celebrating green flags: positive financial behaviours
On the flip side, green flags represent the positive indicators that suggest a strong and healthy financial partnership between individuals.
Financial green flags in a relationship, as identified by psychology, are positive indicators that demonstrate financial compatibility and healthy financial behaviours. Some of these green flags include:
Open communication
Both partners can openly discuss their financial goals, values and concerns without judgement or defensiveness.
Shared financial goals
The couple has aligned goals for saving, spending and investing, and they work together to achieve these goals.
Financial responsibility
Both partners demonstrate responsible financial behaviours, such as living within their means, paying bills on time and managing debt wisely.
Respect for differences
Each partner respects the other's approach to money management, even if it differs from their own, and they can find a compromise when necessary.
Trust and transparency
There is a high level of trust and transparency regarding financial matters, including joint accounts, spending habits and financial decisions.
Supportive financial behaviour
Both partners support each other's financial pursuits and offer encouragement rather than criticism.
Recognising and addressing financial stress in relationships
In the realm of relationships, financial stress can put a significant strain on couples, and it's important for partners to not only recognise the warning signs but also actively address and reconcile financial differences.
Naran suggests the following strategies for couples seeking to navigate financial stress:
Honest and transparent Communication: Regular discussions about financial goals, concerns and expectations are crucial for addressing financial stress.
Regular check-ins: Weekly and monthly conversations about challenging topics, including finances, can help build understanding and trust within the relationship.
Couples therapy: Openness to therapy can aid in working through financial issues, especially those rooted in upbringing and perceptions of money, leading to enhanced self-awareness and understanding of its influence on the relationship.
Aligning on financial matters: Couples should strive to work through financial disagreements with transparency and respect, finding common ground on financial approaches and goals.
Budgeting together: Developing a mutually agreeable budget and being open about financial responsibilities can signify financial harmony within the relationship.
According to Hancox, it is beneficial for South African couples to seek the assistance of a financial adviser together. Hancox encourages couples to navigate the planning process as a united front, allowing them to find compromises and build on their strengths as a couple.
Everyone has their own background and perspective on money, and a neutral financial adviser can assist couples avoid negative habits while creating positive ones.
Hancox draws attention to the fact that as their relationship evolves, the financial adviser can continue to provide support by adjusting strategies in line with their goals and needs.
This collaborative approach aligns with the growth and development of both their relationship and financial well-being.
Naran added that couples should try to nurture and grow their financial connection, “Knowing and valuing how your partner thinks about money is critical to finding financial balance.
“It's important to talk openly, figure out how to manage money together and separately and be ready to adjust to changes in your financial situation.”