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Not all new couples honest about financial baggage
TD Canada Trust asks dating expert Christine Hart for advice on how to discuss a less-than-perfect financial past
TORONTO, July 15, 2013 /CNW/ - It's not unusual to bring baggage into a new relationship and financial baggage like a persistent credit card debt or lingering student loan is no exception. Interestingly, research from TD Canada Trust, shows one-in-five Canadian couples (22%) admit they are not always one hundred per cent honest with their partner about their spending and saving habits. No need to check into couple's therapy yet - TD and dating guru Christine Hart have some advice to help start the conversation.
"Financial baggage is not uncommon; we all have independent financial lives before we enter into a relationship and that can include old student loans, a tarnished credit rating or on the flip-side a healthy RSP or savings account," said John Tracy, a senior vice president at TD Canada Trust. "Opening up about finances can be hard, especially at the start of a new relationship, but it is vital couples have honest conversations in order to build a solid financial future together."
Dating expert Christine Hart agrees that couples need to be honest about any baggage - financial or otherwise - they bring into a relationship. Open communication is crucial in determining compatibility with a potential partner.
"Going through a recent credit card statement over cocktails is certainly not the most romantic way to approach a first date, but avoiding tough money topics altogether can be dangerous," said Hart. "As the relationship grows, so too should the conversations about future goals and finances."
TD Canada Trust and Hart provide advice to couples on how and when to have the difficult conversation about money:
1. When to have "the talk"
Money generally comes up in conversation around the third date, according to Hart. This could be a mention of who is picking up the dinner cheque or covering the candy tab at the cinema. By the sixth date, couples should have an informal conversation to assess their date's financial personality - is he or she a penny pincher or shopaholic, risk taker or security seeker?
"Bring up your own relationship to money first to create a sense of ease around the topic, and then ask if your date can relate," said Hart. "Even a simple discussion about upgrading a gym membership or cutting back on lunches out can help get feel for someone's spending habits."
2. How to delve deeper into the big 'debt reveal'
When to have the deeper debt discussion depends on the couple, their age and the nature of their relationship, but couples should not wait until they are signing a lease or picking an engagement ring.
"When couples are ready to have the debt talk, they should be prepared to ask and answer much more direct questions," said Hart. "For example, 'I was talking to my advisor today, and they said I only have a few months to go before paying off my student loans. How about you? Where are you in terms of paying off any debts?'"
Debt doesn't have to be a deal-breaker, according to Tracy. "Believe it or not, some debt can actually help people achieve financial goals," said Tracy. "For example, an RSP loan used to help maximize any unused RSP contribution room could be considered good debt. What matters is that debt is used responsibly and there is a plan in place to pay it back."
3. Addressing money mismatches
If one person is saving for a rainy day but their date is thinking about the next big shopping adventure, the relationship may be headed for some challenges, but Hart warns against walking away at the first sign of cash conflict.
"We can be too quick to dismiss potential partners these days; values about money are far more important than what exists in someone's bank account on the first date," Hart said. "If there is an issue, start with a compliment and try to track the issue back to values instead of criticizing, patronizing or blaming each other."
For example, a wallet full of cards doesn't necessarily mean a date is a spendthrift or debt-monger. "Carrying a balance on a credit card to fund short-term lifestyle spending may set off a red flag," said Stephen Menon, Associate Vice President, Credit Cards, TD Canada Trust. "However, using a travel rewards credit card and repaying it promptly can provide many benefits, such as tracking spending, building a credit history and can help save money on travel down the road."
4. Popping the 'joint finances' question
Hart said most couples say 'I do' to joint finances, in some capacity, when they move in together. "Combining finances requires complete openness. Couples shouldn't hide debts or spending splurges from each other, or it will create a lack of trust which can trickle into other areas of the relationship," Hart said.
Tracy suggests having a formal conversation to set ground rules and develop a joint financial plan. "There are many benefits to joint finances, but it's also important that couples set personal financial goals outside of those they have with their partner," Tracy said. "For example, many couples share a joint bank account to pay household bills, but establishing a second bank account, such as a high interest savings account, can provide a sense of autonomy and responsibility when it comes to saving."
About the TD Canada Trust Love & Money Poll
TD Bank Group commissioned Environics Research Group (www.environics.ca) to conduct an online custom survey of 4,564 Canadians aged 18 years and older who are currently in a relationship. Responses were collected between January 10 and 25, 2013.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
SOURCE: TD Canada Trust
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