Money isn’t the most romantic conversation topic during the dating stage per se, but it’s important to keep an eye out for potential money red flags in a partner just as you would for potential emotional red flags. According to a recent survey conducted by eHarmony and money management app YNAB, many daters keep a mental checklist of money red flags to look for when courting someone. Can you guess what they are?
“Those who have a habit of budgeting regularly are more comfortable and interested in discussing finances earlier in a relationship,” YNAB money expert Rachel Wong tells HelloGiggles of the findings. In fact, 63% of YNAB budgeters say it’s appropriate to discuss finances within the first six months of dating.
“What we’re seeing here is that people who have a clear plan for their money are more comfortable discussing finances, and might find more value in initiating open financial discussions with a potential partner in the early stages of a budding relationship,” Wong says.
The study surveyed a combined sample of 2,744 respondents, made up of the general public and money conscious YNAB users. Among those respondents, debt, late credit card payments, a draining savings account, and an outstanding IRS balance were ranked as the biggest money red flags.
RELATED: 3 Ways to Discuss Finances With Your Partner in a Healthy & Productive Way
We tapped eHarmony and YNAB experts to better understand why these financial scenarios warrant a red flag, how daters can spot them, and potentially even downgrade them to yellow flags.
1. Having an uncontrollable amount of debt
Debt sucks. There’s no way around it — but, not all kinds of debt should send you running in the opposite direction. At least, not yet. It’s easy to jump to conclusions and think debt is due to frivolous spending — but in some instances that isn’t the case.
Before you nix this person for good, dating coach and eHarmony relationship expert Laurel House suggests having an open conversation about how and why this debt was accrued as well as if there is a timeline or plan in place to pay it off. Does the debt stem from luxury spending or careless investments? Did the person go into debt at the expense of putting themselves through school, purchasing a house, supporting family, or starting a business? The different types of spending say a lot about who you are and your priorities, House adds.
“Is the debt temporary and circumstantial or evidence of a deeper difference in values?” House prompts daters to evaluate. “Once the ‘why’ is established, the ‘how’ needs to be understood.”
While it’s healthy to have a non-judgmental approach to debt talk, it’s still important to keep your eyes open and ears peeled for anything that could insinuate the person doesn’t have their debt under control. Is there evidence of change, or do they seem to be repeating the same mistakes? If so, it may be time to raise the red flag.
“Ask questions! Pay attention to current actions and value attitudes, and be aware of who they aren’t to be sure that who they were isn’t in fact who they still are and who they will continue to be,” House cautions.
2. Falling behind on loan and credit card payments
Similar to the aforementioned red flag, it’s important to ask the person WHY they’re days, weeks, or months late on paying off a loan or credit card statement. Albeit, if you notice that someone’s spending style, work drive (or lack thereof), ambition, and dedication are in fact the reason for not paying off their bills, then that could be a sign of a lack of financial responsibility, says House. And that, my friends, is a huge red flag.
“When you look at people who are conscious about budgeting, they place a high priority on getting their own personal finances in order. So, when they’re looking for someone to be compatible with and find out the person is behind on credit card payments, that might signal that this person might not approach money management in the same way they do,” Wong explains. This can snowball into a leaking savings account or debt as well, she adds.
“Be aware of a ‘fun for now’ attitude,” House also warns. “Do they thoughtlessly spend money on fancy dinners and nice clothes because it’s fun and feels good now, rather than putting that money aside to pay off the debt that they already are in and further accruing?”
According to daters, – and experts agree! — this is another red flag.
3. Owning a sum of money to the IRS
As explained by House, when someone owes money to the IRS, it might be because they didn’t pay their taxes, didn’t honestly account for their earrings, filed late or for an extension, or went on a payment plan. In these red flag cases, you have to talk it out. Again, how and why did it get this point, and what are they proactively doing to get back on their own two feet and rectify the issue?
You can’t expect someone to get financially vulnerable with you if you’re coming to the table with a demeaning, judgemental attitude. Check yourself. House recommends offering up a time when you were in a sticky situation with money as a way of “creating an environment of safety and trust for your potential partner to financially strip down, too.”
4. A neglected savings account
When people think about the financial health of potential suitors, there are thresholds that signify a sense of stability. An actively growing savings account is a big one, according to daters.
“Over 60% of YNAB users say that having money in savings is a top positive quality in a potential partner,” Wong says. “This speaks to how savings is perceived as a fairly solid indicator of stability — even more so than something like a high credit score.”
Similarly, money in savings often represents feelings of safety and security, both qualities that are also important in romantic relationships, she adds.
Keep in mind that someone who prioritizes their savings account means they’re also thinking about the future. Perhaps they’re saving for a down payment on a home or their future kids’ college tuition or to have an emergency cushion. A savings account that gets little to no action is a red flag and harps back to that “fun for now” attitude House previously mentioned. While thrilling at first, it can come back to bite you in the wallet.
Are these red flags enough to warrant a breakup after a few months of getting to know someone?
Let’s say you’ve been casually seeing someone for a few months. Depending on how much time you’ve spent together and how much emotional depth you’ve delved into, you might be starting to catch real feelings for this person. If this is when you begin to discover financial red flags, House advises to look back at their habits, lifestyle, and attitude and first try to gauge if the money problems make sense based on their spending style.
“While you should not make a judgment call based on what you have seen, this is part of information collecting to see if you can extract patterns that would contribute to a lack of financial responsibility,” House explains.
With your data, gently bring it to the person’s attention so you can try to understand the why and how behind the what. “This is when you momentarily remove yourself from the heart and the hormones, and instead focus on the mind,” per House.
Consider the long term financial repercussions if you stay. Is it worth it? Are these red flags on their way to becoming yellow? What are their financial green flags?
