Family Inc.

Dennis Friedman

WHAT’S THE MOST important financial decision you’ll make in your life? Is it when to take Social Security? Choosing the right asset allocation for your investment portfolio? How about the decision to rent or buy a place to live?

I believe that, for many people, it’s who they choose to be their significant other. Together, you’ll decide how you spend your money and how much to set aside for retirement. There will be endless decisions dealing with money—and some will have a huge impact on your financial wellbeing. Your significant other will likely prove to be the most important business partner in your life.

You might ask yourself: What should I look for in a significant other? Is it the person’s character, such as personality and temperament? Is it intellect or earning power? How about the individual’s body language? As George Harrison wrote, “Something in the way she moves attracts me like no other lover.”

It could be that the most important quality is his or her credit score. According to a 2015 study, there’s a correlation between credit scores and the probability of a relationship’s success. The study found that the higher the credit scores at the beginning of a relationship, the lower the chance that a couple would split up. In addition, the closer your credit score is to your partner’s, the greater the likelihood of staying together.

Financial incompatibility is one of the most common reasons for divorce. When one person is a spender and the other is a saver, it’s difficult to reach an agreement on financial goals. If a divorce occurs, this could jeopardize the financial wellbeing of both individuals. Going through a divorce for some people is like starting over financially, because you’re likely to lose 50% of your net worth.

What are some major financial issues a couple might have to navigate during their lives? Having children is a big one. The Department of Agriculture calculates that the cost for a middle-income family to raise a child through age 17 is $233,610. This cost only includes necessities, such as housing, food, child care, transportation and clothing.

According to NerdWallet, “If you choose to provide more expensive essentials and add common perks, you could easily spend over $745,000 from birth to age 18.” Those perks might include private high school, college preparation expenses, music lessons, tutors, laptop, wireless phone, birthday and holiday presents, and vacations.

The costs of raising a child are potentially endless: You can spend as much as you want. As a result, the decision to have children and how much to spend might be a couple’s biggest financial decision during their lifetime.

Another key financial issue: how much debt you each bring to the relationship. Are you willing to be burdened by your partner’s college or credit card debt? If you decide to get married and want to buy a house or car, his or her outstanding debt could have an impact on your ability to get a loan as a couple. Major purchases might have to be made in the individual’s name who has the better credit score. A low credit score can make things less affordable.

Obviously, there are other factors that should be considered when choosing a mate and how many children to have. These decisions shouldn’t be based solely on money. That said, financial compatibility ought to be near the top of your list when seeking a partner. My advice: Do the wise thing—and ask questions about both the financial solvency and goals of your future significant other.

Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous blogs include Creative DestructionTaking Inventory and A Word of Advice.

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