You can avoid financial red flags by avoiding financial secrets, discussing financial goals, helping each other in financial matters and taking financial decisions mutually.
Financial decisions are key to your relationship. Without mutual respect for each other’s financial goals, it becomes difficult to manage your house. Often family members tend to ignore each other’s financial challenges and fail to discuss their common goals. However, there are critical signals you must know about to avoid getting into a financial mess owing to the fault of your partner.
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If you notice something unusual about the financial habits of your partner, you must pay immediate attention to it and also bring it to the notice of your partner. Here are some important tips that can help you spot financial red flags.
Avoiding Important Financial Discussions
Your spouse can make your financial journey easier, provided you both are aware of your common financial goals. It is key to understand your life partner’s financial needs, habits, and vulnerabilities and be ready for regular discussions. Not getting involved in a regular financial discussion can result in serious financial issues piling up and also dire consequences in the future. If your life partner is not ready to discuss the bad financial situation, it can put both of you in trouble.
So, hiding the situation can lead to a lack of trust in relationships. Partners must regularly discuss their financial decisions with each other. They can analyse their bank statements, credit card statements, credit reports, etc. It can help in avoiding financial red flags.
Adhil Shetty, CEO, Bankbazaar, says, “Building an emergency fund, budgeting wisely, and seeking professional advice when needed are cornerstones of a resilient financial partnership.”
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Not Ready to Share the Common Debt
You may have one or more loans which are used for common benefits. For example, a home loan, car loan, etc. If both the life partners earn and contribute to the loan repayment, it can help in closing the debts easily. However, if one of the life partners doesn’t contribute financially towards the common debt, it can expose the other person to financial hardships.
There is no reason not to contribute to the common debt unless there is a trust deficit. Not contributing to the common debt can result in a financial red flag, and you must spot it before you end up spoiling your relationship.
Reckless use of credit cards and debts
Reckless use of credit cards can spoil the credit score of the person in whose name the credit card is issued. If you notice that your life partner is not maintaining financial discipline while using your credit card or the addon card, you may consider it as a financial flag that can create trouble in your relationship.
Life partners should respect the financial obligations of each other. A credit card, if not used with discipline, can easily spoil the creditworthiness of the card user. So, while using the add-on card or the credit card of the spouse, you must repay the dues on time and exercise extra financial discipline to avoid the financial red flag.
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Similarly, before applying for a new loan, you must inform your life partner about it and explain the reason for the same. New debt can increase your loan repayment obligation, and you may need to restructure your finances to repay the EMIs. Taking a debt decision with mutual consent can help them avoid the financial red flags in their relationship.
Lying on matters related to money
Lying on financial matters can invite a red flag for any relationship. If life partners lie about financial matters, they will deter away from their financial goals. Once their lie surfaces, their relationship may collapse because of a breach of trust.
It’s important to never lie in relationships. If you spot a financial red flag because of mistrust, you may talk to your life partner immediately and get the matter resolved.
How to avoid financial red flags?
You can avoid financial red flags by avoiding financial secrets, discussing financial goals, helping each other in financial matters and taking financial decisions mutually. Shetty adds, “Transparency plays a vital role; maintaining complete honesty about income, expenses, and debts fosters a sense of unity and trust. Setting common financial goals ensures a shared vision and helps allocate resources effectively.”
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Allowing access to crucial financial documents like bank statements and ITR with each other can help you not only detect financial red flags but also in building greater trust and mutual understanding.
