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Financial Red Flags to Watch Out For in Your Partner

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9.28.21 |

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These 8 red flags could derail your relationship

Love is a complex emotion, and when finances enter the picture, things can get even trickier.

While trust, shared values, intimacy, support, and mutual enjoyment are fundamental to a thriving relationship, achieving financial compatibility is equally crucial for long-term success.

A study by the Institute for Divorce Financial Analysts found money issues were the third leading contributor to divorce, following general incompatibility and infidelity.

So, it’s crucial to acknowledge and address potential financial red flags that could jeopardise your future together.

What are red flags in a relationship? In this context, red flags are warning signs that indicate unhealthy or incompatible behaviour. They might not always be recognisable at first — which is part of what makes them so dangerous. However, they tend to grow bigger and become more problematic over time.

You might be wondering: What are these red flags, and how can you determine if you're financially compatible? Let’s take a look.

Financial Compatibility

Financial compatibility refers to how much your financial attitudes, habits, and goals align and complement each other within a romantic relationship.

Financial compatibility will vary for couples based on their goals and financial situation, but can include spending habits, saving tendencies, attitudes towards debt, financial goals, and approaches to budgeting and investing.

Financially compatible partners are typically able to communicate openly about money, make joint financial decisions effectively, and work together towards shared financial objectives.

It’s perfectly fine for your partner to not have everything figured out when it comes to their finances, and nobody is suggesting you break up with someone based on them paying a bill late, not owning a home, or if they have a debt like a student loan and you don’t.

However, money can be a divisive topic in a relationship and if you don’t align with your partner it can lead to serious issues.

This is supported by research released by Westpac, which revealed that financial matters lead to disagreements for 91% of Australian couples. Among these, frivolous spending (62%) emerged as the primary trigger for disputes, closely followed by financial difficulties or worries (56%). These issues outweigh arguments related to social media or phone usage (55%), political opinions (51%), and even past relationships (38%).

With the cost-of-living crisis, it's a more important time than ever to discuss finances with your partner and the potential impact of financial stress on your relationship.

A survey by the Retirement Commission found 55% of Kiwis are struggling to manage their finances, and 51% were "starting to sink” or are “treading water”.

Research Lead Dr Jo Gamble said, “Sixty percent of the average population have experienced financial stress within the last year.”

"Financial stress can ripple across a person's whole life impacting not only their financial wellbeing but how they relate to their friends and family, and the choices they make socially,” Dr Gamble went on to say.

The sooner you can identify financial stressors and potential financial incompatibility in your relationship the sooner you can address any issues, resolve them, or move on if it’s a dealbreaker for you.

Let’s take a look at eight red flags that could be the make or break of your relationship.

Financial Red Flags

1. The Secret Keeper

Financial infidelity doesn't involve secret love affairs, but rather secretive financial behaviour.

Imagine a partner concealing debt, downplaying their assets, dodging conversations about money, lying about their spending, being overly secretive and refusing to share financial information.

Money experts use the term "financial infidelity" to describe these deceptive behaviours and say any one of these is probably a big warning sign.

Talking about finances may not be a very sexy topic to discuss with your partner.

The study by Westpac found two thirds of those surveyed agree that couples who regularly talk about money are more likely to be in a healthy relationship, however, more than one in five (22%) admitted they rarely discuss finances with their partner.

"In healthy relationships, it's important both parties know how much money they have and where it is going with an equal contribution to money decisions. This may help alleviate concerns, manage expectations with one another and better set yourselves up for success in achieving your individual and joint aspirations," Westpac's Annabel Fribence said.

It’s important to note that there is a big difference between feeling awkward about discussing your finances with your partner, versus actively keeping finances a secret.

Dasha Tcherniakovskaia, a Massachusetts-based couples therapist specialising in financial matters, says refusing to talk about finances is an issue.

"An inability or unwillingness to talk about money in general for various reasons should be a red flag," she said.

After all, your partner’s evasiveness could end up being a major roadblock for you both down the track. For example, when it comes to buying a house together. Their secret debt or secret spending could derail your progress and even prevent you from securing a home loan.

She suggests planning a fun “money date” with your partner.

"I suggest couples plan a date over a glass of wine or hot chocolate, so it's something they would actually look forward to, in a nice environment," she said.

"Talk about money in a more neutral, non-judgmental way by asking about values as opposed to numbers."

You can start with gentle questions which feel less intrusive. For instance, are you a saver or spender? What are your financial goals?

While merging spending habits and financial goals can be a challenge, it's crucial to address potential financial infidelity that could impact your future together.

2. The Controller

Financial infidelity can even escalate into something called financial abuse.

In some relationships, one partner might use money to manipulate or control the other, especially if there's an income disparity.

This abuse can manifest as controlling spending, withholding financial resources, or even pressuring the other partner into debt.

A study by Michigan State University revealed economic abuse, defined as controlling a person’s ability to acquire, use, and maintain economic resources, is as common in battering relationships as physical and psychological abuse.

“In fact, in one study of 103 domestic violence survivors, all of the women reported being psychologically abused by their partners, 98% had been physically assaulted, and all but one (99%) had experienced economic abuse.”

The National Network to End Domestic Violence says financial abuse ”is one of the most powerful methods of keeping a survivor trapped in an abusive relationship and deeply diminishes the victim’s ability to stay safe after leaving an abusive partner”.

“Surveys of survivors reflect that concerns over their ability to provide financially for themselves and their children was one of the top reasons for staying in or returning to an abusive partner.”

3. The Flaunter

A potential suitor who flaunts their wealth on the first date is one of the most off-putting things.

Research by MoneySuperMarket found 52% of the 3,000 people surveyed said that someone attempting to look richer than they are is a major financial red flag in a new relationship.

Jessica Alderson, co-founder and relationship expert at So Syncd, told Metro it’s “definitely not a surprise that people flaunting expensive items is the number one financial red flag when dating”.

“It’s because it stems from insecurity. When someone shows money in an obvious way, it often means that they lack confidence in other areas of their life. It can also imply that they lack depth.

“There are some people who are attracted to overt displays of wealth, in the case of the Tinder Swindler, but for a lot of people, it’s a turn off.”

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4. The Penny Pincher

Does your partner habitually evade their portion of expenses or conveniently "forgets" their wallet when you’re out on dates?

Maybe, they said they would go in on a big purchase with you, only to never pay their half of the share.

Are they quick to suggest going out for dinner or staying at a hotel, as long as it’s on your dime?

Have they asked you to pick up their share of the rent because they’ve run out of money that week?

While a frugal partner may at first glance appear to be someone who is fiscally responsible, this sort of behaviour may suggest that they view your money with a frivolous attitude and are shirking their financial responsibilities.

5. The Chronic Borrower

Everyone needs help sometimes, but habitual borrowing from friends, family, or even you, can indicate an inability to manage finances effectively.

This behaviour can be a sign of underlying financial issues or a disregard for personal responsibility.

6. The Risk Taker

Taking risks with your money can come with a high reward. But there is a difference between taking educated risks when investing versus outright gambling.

Gambling, compulsive spending, or living beyond one's means are red flags not just for financial health but also for potential addictive behaviours.

These habits create financial instability and can have disastrous consequences for your future together.

7. The Present-Focused Partner

If your partner doesn't budget, save for major goals like a home, or plan for retirement, it could signify a short-sighted approach to finances.

While developing financial goals often takes time and discipline, a partner who makes little to no effort to financially prepare for the future may clash with your long-term vision and create significant challenges down the road.

8. The Debt Collector

Is your partner in significant debt?

Racking up debt, missing payments, and constantly opening new credit cards is not only financially reckless but also damages credit scores.

This can have long-lasting consequences, impacting your ability to secure loans together for major purchases like a home.

Addressing the Red Flags

These red flags don't necessarily mean the end of your relationship, but they do demand open and honest communication.

Here are some steps you can take:

Evaluate the Severity

Determine if the red flag is a one-time occurrence due to unforeseen circumstances or a deeply ingrained pattern. This will help you gauge the potential for change.

Initiate a Conversation

Approach your partner calmly and express your concerns. Focus on specific behaviours and how they impact you and your future together. Try and concentrate on the behaviour you’d like to see, rather than what the issues are.

Seek Professional Help

If communication proves difficult, consider involving a couple’s therapist. They can provide a neutral space for communication and guidance in navigating your financial situation.

Know When to Walk Away

If your partner is unwilling to address the red flags or work towards financial responsibility, it may be time to prioritise your own well-being. Remember, walking away protects your future security and emotional health.

The Bottom Line: Are Financial Red Flags Deal Breakers?

Financial compatibility doesn't mean having identical incomes or spending habits.

It's about shared financial goals, open and respectful communication, and a willingness to work towards a secure and prosperous future together.

By addressing red flags early and seeking professional help, when necessary, you may be able to work through financial red flags and build a strong foundation for a long-term partnership.

However, if you can’t work through your financial issues as a team, it might be time to call it quits. In the words of Kenny Rogers,

“you've got to know when to hold 'em, know when to fold 'em, know when to walk away, and know when to run”.