During the month of February thoughts invariably turn to matters of the heart — from optimism about finding new connections to gratitude for enduring relationships, or even reflecting on whether love has run its course. But at the heart of love lies compatibility. When considering a long-term commitment, couples often evaluate shared interests, values, and goals ensuring they align. Is your partner physically and emotionally compatible? Are they ambitious and of good moral character? Is the person a good communicator? These are some of the things considered when deciding whether they are compatible. While these factors are frequently assessed, one critical area often overlooked is financial compatibility.

You may share a sense of humour or align on religion and politics, but as the saying goes, “Money makes the mare run.” Everything from raising children and paying bills to pursuing dreams requires money. That is why understanding your partner’s financial habits and philosophy is essential to build a future together. As unromantic as it may seem, financial compatibility is a critical element of the foundation for a secure and fulfilling “happily ever after”.

Financial behaviours can lead to incompatibility

In the early stages of dating, discussing finances might feel premature or uncomfortable. However, as relationships deepen, these conversations become critical. Studies have shown that one of the most common reasons for divorce, or alienation of affection, is financial issues and this often ranks above infidelity and poor communication. According to most studies, it is estimated that financial problems contribute to 20-40 per cent of all divorces. That means that for every 10 marriages that end in divorce, four of them are because of money. However, it’s not simply money troubles for money troubles’ sake that causes couples to fail at marriage — the root of these conflicts often lies in differing approaches to money management. That said, understanding each other’s financial behaviours before going too far in the relationship can set the foundation for a long healthy relationship. Or it can let you know whether or not you are compatible before you are too invested.

Consider Pam and Michael, who failed to address bad financial habits before they got married and started a family. Michael spends impulsively, often beyond their means, and showers their children with extravagant gifts. On the other hand, Pam is a diligent saver, who prioritises financial stability and avoids unplanned expenses, even to the children’s disappointment. Pam claims that she is forced to take this hardline stance because she fears Michael’s reckless money habits will leave them broke. In this household, this stark difference has led to financial instability, tension, and recurring arguments. Their failure to discuss financial values early on has taken a toll on their relationship.

Why is the money conversation important?

Even if you and your partner are aligned in many areas, your financial mindsets may be shaped by vastly different backgrounds. Understanding these histories can reveal compatibility and potential challenges. Everybody has a money story and expresses it in their own language. Remember, your partner’s relationship with money didn’t start when they walked into your life. For example, Michael’s financial behaviours stem from growing up in a comfortable, dual-income household where spending was liberal, and savings were not strictly enforced. In contrast, Pam’s upbringing in a single-income household, where money was tight and her mother lived “hand to mouth”, cultivated a fear of financial insecurity. Financial behaviours are ingrained over time, nurtured by personal and family backgrounds. These histories tend to influence their financial decisions and dreams. Both partners need to discover each other’s stories and therefore what they are bringing to the table. Understanding your partner’s relationship with money, including their attitude toward debt and savings, is crucial.

A checklist of money matters to discuss

Money conversations can admittedly be hard to have, especially in a culture where money talk is taboo. However, these conversations must be had with care and sensitivity, to lay the groundwork for a financially compatible relationship. Broach important money topics without judgment and an eye to figuring out where and if compromises can be made.

• Set relationship goals as they relate to finances

Transparency is key. When moving in together or planning a future, discuss your goals, such as marriage, children, homeownership, and vacations, all of which can and will impact your finances. Similarly, be open with the declaration or assets and debt. Concealing financial realities can erode trust, much like hiding other significant life details.

• Division of money

Plan your budget together, outlining who pays for what and how expenses will be divided. Do you want to borrow money? Should you get a loan in both your names? If one of you is more of a spendthrift, weigh the risks. Decide whether to maintain separate or shared bank accounts and consider the risks of joint debt. Poorly managed debt can damage credit scores in the long term and potential future financial opportunities, especially if the relationship ends.

• Financial agreements (or prenups)

If you decide to go forward with marriage and entered the relationship with assets you want to protect, although this can be a touchy subject, you and your partner should discuss prenuptial agreements to protect your assets in case of separation. Drafting a will or estate plan and updating insurance beneficiaries are also important steps. These conversations, though sensitive, provide clarity and security for both partners. Remember, you can change this status as circumstances change. Nothing is set in stone.

Bottom line

In a society that idealises the success of romantic relationships, it’s a wonder that more attention isn’t paid to the subtle underpinnings that make these relationships successful — money. This February, as love takes centre stage, you might be thinking about offering or accepting a ring. Congrats! But don’t let romantic feelings overshadow practical realities. Assess potential red flags, discuss financial goals, and identify compromises to achieve financial harmony. Speaking the same financial love language ensures that money strengthens, rather than divides, your relationship. By addressing financial compatibility early, you and your partner can build a solid foundation for a secure and prosperous future together.

Kimberley Martin – Assistant VicePresident, Corporate Solutions, NCB Capital Markets Limited