Looking at my newsfeed on Facebook, I see a lot of my acquaintances and friends getting engaged or tying the knot. I am now 26, and many of my friends are roughly the same age. Although being in a committed and exclusive relationship allows potential partners to discover more about their potential spouses, one aspect behind relationships that is often neglected is financial compatibility.
Financial compatibility is the degree of agreement of a couple in terms of financial beliefs and decision-making. Simply put, it is the extent to which the man and the woman agree with each other regarding decisions involving money. For instance, some women believe that their husbands should surrender to them their entire salary. Other couples believe that husband and wife should have separate finances, with a joint account to settle conjugal obligations such as education expenses.
Moreover, financial compatibility also deals with agreeing on money management, such as how much financial support to provide to parents, and how to deal with relatives asking for money. There have been instances of marital conflict, especially brought about by marriage from a couple from different economic classes, since the poorer relatives depend on richer partner. This has the effect of making expenses balloon, and crippling the capability of the family to save, and to subsequently invest. A couple should be clear about their agreement on the extent of help they will provide to the extended family
Financial compatibility also involves agreeing on investment strategy and capital budgeting. The husband may prefer renting while the wife may prefer leveraging (i.e. buying a house and obtaining bank financing for it). Decisions like this must be taken as a couple, to prevent quarrels erupting in case of economic difficulty or poor decision-making. Thus, financial compatibility entails communication, transparency and honesty, between husband and wife. Decisions involving conjugal money must be taken conjugally to preserve the harmony of the family.
Lastly and most importantly, financial compatibility entails sharing the same belief on spending habits. If for example, you are content with an old but working phone, or a simple fuel-efficient car, while your partner prefers the latest gadgets or the luxury cars, then this may become a source of conflict among partners. If the relationship is to push through, I suggest that husband and wife sign a prenuptial agreement, and agree how they will split family expenses, while maintaining separate financial accounts for their own preferences.
Financial compatibility is an overlooked yet very important aspect of a successful marriage.
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The author teaches subjects under Interdisciplinary Studies, and Finance and Accounting Department at the Ateneo de Manila University. He can be reached via email at lyee@ateneo.edu for queries.