Audrey (not her real name) met her boyfriend on Tinder, a dating app, back in 2019. They started dating a couple of months before the pandemic caused a massive global economic, sociological and financial reset.
Their dating story is intense. In a year’s time, they started looking at wedding motifs and out-of-the-box ways to exchange vows in front of hundreds of guests on Zoom. Two months from now, they are to be wed, but Audrey tells me her fears are definitely not love or commitment-related.
“I am deeply in debt and I don’t know how to tell him,” she says in tears.
It’s not that Audrey has a closet full of Birkins and Louis Vuittons. Both her parents went through major hospitalizations in 2020 due to COVID-19. Her savings were enough to cover one year’s worth of emergency fund, which was already a sign of financial superiority back in 2019. But it didn’t make a dent in her parents’ hospital bills. Being an only child who adored her parents, she had checked them into the best hospital she could find and before she knew it, her credit card bills were five times her annual salary.
It was time to ask for help.
However, Audrey could not find the courage to open up to her fiancé. She is afraid he will call off the wedding.
As her financial adviser, I asked the fiancé Eugene (not his real name) some questions. It turns out his debt is bigger than Audrey’s and in his case, he hides a classic living-beyond-your-means life story.
The complications of relationships can make lack of financial compatibility a deal- breaker. Love does not conquer debt; neither does it fix “spendthriftosis.” When the warm, fuzzy feelings after the wedding inevitably die down and both couple start building their life together, financial dishonesty and wide gaps in financial values cause ugly breakups.
This is not to say that debt is an irreversible curse. It is still possible to find a lifetime of relationship bliss if certain tools are used by both parties with full-hearted commitment. Even couples who are already financially compatible will do well to use these three financial tools for financial peace.
1. Combined vision board
When I first meet with couples, I bring out my huge colorful arts and crafts kit. I ask them to draw, not list down, the things they would like to enjoy in their old age that require money and planning to achieve. The staples, of course, are a house, a farm, travel overseas and cars. The most interesting and unique ones I have seen in my 30 plus years of doing this are a nose job and karwahe (carriage).
As financial adviser, I gently prod them to add a small drawing, for example, that signifies the need to pay down debt and live a zero-debt lifestyle. Or build an emergency fund good for 10 years. Or a health and retirement fund.
These sessions can be therapeutic. Couples “rediscover” each other’s dreams in a fun way and in the process, find themselves more powerfully bonded. The colors and drawings get etched into their mind and provide them with an emotional connection which kicks in when they are facing massive budol (unnecessary spending) temptations. We attach a monetary value to each of the drawings and goals and the total becomes the basis for creating a financial plan. But more than the numbers, these sessions give couples the space to remind each other when spending goes overboard and puts these visions and dreams in danger.
2. Weekly, monthly and annual financial check-ins
One of the ways to stay “present” in each other’s lives is to have constant dates just like when they were trying to get to know each other; everybody knows that. But how about financial Saturdates? Every Saturday, for one or two hours, schedule a check-in to update each other about your spending limits, your savings targets, new opportunities in investments or losses. Throw in some wine or punch, charcuterie, or kropek, if that is the only thing the budget can afford. What’s important is a lot of good humor, so that financial discussions don’t end up to be explosive. You don’t need permission to have some intimate moments afterwards! In fact, that’s an order.
These financial dates can be short on weekends, a little longer for the full month check-ins, and maybe the whole weekend in a resort somewhere for the “annual financial family conference.” Set it up with very good rules: absolutely no blame games and employ maximum tolerance. If things get heated up, take a break and start again.
3. SALN
Couples should have a joint statement of assets liabilities and net worth or SALN. This is an important tool in discovering your starting point as you approach the exciting part of your lives together. Audrey and Eugene may have a negative net worth now, but their decision to continue the wedding preparations was reached with much introspection and acceptance. Imagine what would have happened if the negative net worth were a rude discovery after the wedding and the bills started piling up. Now, even before they walk down the aisle and say their wedding vows, they already have a five-step plan how to fix their debt situation.
Every year, couples should revisit this joint SALN to see clearly if their monthly savings and investments are giving healthy results. In addition, if something happened to increase their debts during the year, looking at an updated SALN at the end of the year will give them inspiration and resolve to wipe it out.
When to disclose
This list is by no means exhaustive. There are many more steps toward achieving that financial peace. Couples who start their relationship on different financial footing can still find financial bliss, but only with commitment and consistency.
In our last consultation meeting, Audrey and Eugene had an interesting question that we all laughed about. “When dating, when should you disclose your financial condition?” Eugene asks.
“The moment things are getting serious, but definitely not on the first date, especially for those who are richer than the usual,” I say.
“Who pays during the date?” Audrey asks.
“Whoever invited the other person, unless one partner insists they pay. It’s also okay to go Dutch, bakit ba (why not)?” I tease them.
They smile and hold hands, and Audrey reaches into her bag and gives me a wedding invite. I gulp. The wedding will be held in a resort in the South and ninangs (principal sponsors) are to pay for their own plane fare.