Previous: Beth of Budget Bytes on Meal Prep, Cheap Recipes, and the Best Things at Trader Joe’s
Next: 3 Ways I Keep My House Clean As A Reformed Slob



View count:111,702
Last sync:2024-06-24 16:15
Money affects all the relationships in your life. Whether you're living at home with family to save money, navigating friendships with different income levels, or figuring out how to approach the topic of money with your significant other, these are some of the biggest financial red flags to watch out for.

Money & relationship stress:

Millennial overspending survey:

Lending money to a friend statistics:

Splitting bills with roommates:

Debt caused by dating:

Advice from a relationship expert:

Money & divorce:

Financial abuse:

Higher vs. lower earner expectations:

"Fuck Off Fund":

Financial literacy:

Watch more of The Financial Diet hosted by Chelsea Fagan here:

The Financial Diet site:

Hey, guys. It's Chelsea from The Financial Diet, and as some of you may notice, after a couple of test shots in different places, mostly just facing into the corner behind me, we have come up with a new set for the Tuesday show, which is just getting a little glimpse of my dining room in the background. So welcome, and some of you really technologically-savvy internet sleuths might crop in super hard on my bookshelf and see what I'm reading.

Spoiler alert, they're all bad. J/K. I read a lot of great books, but I also read a lot of embarrassing ones, so.

Anyway, long story short. Here I am in a slightly new set, same home, but ready to talk to you guys about some money. And this week, I wanted to talk to you guys about the various red flags that are almost certain to come up in some of your most important relationships that you should really pay attention to.

Obviously, a lot of us think about handling money when it comes specifically to romantic relationships, but there are tons of relationships in your life that will have a financial implication or financial element to it that have nothing to do with your romantic partner. People like roommates, family members, close friends, even people you might work with can all come into your life in a very financial way. And knowing how to spot the red flags in their financial behavior early on can prevent you from getting into a seriously complicated situation with them.

Because left untreated or unprepared for, money can be an enormous stressor. In fact, about 36% of Americans who are married or in a serious relationship say that money is their number one stressor. And when it comes to relationships with people like our closest friends, with whom we might be doing most of our social spending, about 80% of Americans say they don't communicate it to their friends when they might be overspending.

That lack of communication can lead to all kinds of misunderstandings, and in the worst case can leave you susceptible to outright manipulation or even financial abuse. So in addition to curating a healthy open line of communication around money, we wanted to help you guys spot the really serious financial red flags that may come up in your relationships so you know how to recognize them, and in many cases, get rid of that person. Zero tolerance for financial abusers in the house of TFD.

Number 1, they are always late or find a way out of paying their share. It is simply not unusual to loan money to a close friend or a family member or a roommate. In fact, around 71% of Americans, when polled, said that they had loaned money to someone in their life at some point and had yet to be paid back, which is part of the reason why one of our key pieces of advice when it comes to money between friends or close people around you is to always treat any money loaned to them as a gift.

You should never loan money that you can't afford to go without because there is often going to be some kind of trouble in getting you paid back on time, and that's immediately going to be a huge source of tension. Now, of course, when it comes to loaning money to people, there is always probably going to be an opportunity to say no, that you just can't afford to do it. But sometimes you are engaged in some kind of financial commitment with another person, and they're being late or not paying their fair share immediately has an impact on you.

A really common situation for this is roommates, which is why it's so important that all roommates be on the lease and legally liable for that money. Because let's say you are the sole lease holder but your roommate isn't coming through with their portion of the rent and you can't afford to pay it all yourself. That is going to have a negative impact on you and nothing will be on their record from it.

Yes, obviously, you can deal with it one on one, maybe even kick them out of the living situation, but that's still going to be a mark on your records and get you in trouble with the landlord, if not entirely evicted. But even if it's something as simple as you and a friend agreeing to go out and split the bill, you take it and put it on your card. They say, oh, I'll send you some money for it now, and they don't, sometimes it can feel really awkward to go and ask them for that money, even though they agreed to give it to you.

And a friend who is doing this frequently, who is forgetting to pay you for what they owe you or not giving the fair share they agreed to, that's someone who is overstepping your rightful financial boundaries. They're treating your money as disposable while theirs is precious and they are not being respectful to you. Sometimes, depending on the nature of this issue with a person, it may just mean something as simple as you're not going to loan money to them anymore.

But it's important that you recognize that behavior as it happens and feel empowered to say no in the future. Even if it makes you look like an asshole, you have every right to be like no, everyone is going to put their card down this time. Number 2, they pressure you to spend more than you can afford.

Now, this one is way more common than I think most of us realize. Just under 50% of millennials have stated that they have overspent at one time or another in order to keep up with social obligations. And it can be really difficult in the moment to say, hey, I can't afford to do something, especially if you're already there.

But let's say, for example, you and a bunch of your friends go out to a dinner and you agree to split the bill and everyone is suddenly ordering way more than you're ordering. It's really hard to then back out and say, I mean, hey, listen, I only got a salad and drank water. And maybe occasionally that happens out of genuine misunderstanding, but if you're constantly being forced to have that cringe-worthy, oh, I hope this goes through swipe moment with your card because you feel that you can't be honest with your friends of how what you can and can't afford, that's a red flag.

And when it comes to dating, if you feel as though you have to spend a certain amount of money to impress someone, that's a red flag, too, and a really common one. Among people ages 18 to 34, around 30% of them are about $500 in credit card debt due to dating. And yes, in the cold, single light of day, it can feel like, why the hell would you put a bunch of money on your credit card you can't pay back to impress someone you may never even see again?

Well, because the way we've socialized people is we feel like it's incredibly awkward to be honest about budgets. But if you feel that you can't be honest with people, whether that's a friend or a potential date, that's a red flag about your relationship with that person. The words "it's not in my budget" need to be a very frequent and fluid part of your vocabulary.

And if you're with someone who's financial means are higher than yours, because let's be clear, most friend groups will have people from at least somewhat varying financial backgrounds, it's on them to make sure they're being conscious about not putting you or others in an uncomfortable financial position to keep up with them. Feeling obligated to spend beyond your means and not being honest about when you can't is a big red flag. Number 3, they make financial decisions that impact you without consulting you.

So sometimes this one can feel almost exciting in the moment, because let's say you're with a partner who likes to treat you to things, surprise you with a vacation or a brand new TV or a new car, or something that feels really exciting to receive. That can cloud the fact that that is a big financial decision that directly impacts you and was probably done with money that was at least partially yours. Any healthy couple should have a number at which anything below that spending can be totally discretionary, or they can have their own separate accounts where that's their money to do with as they wish.

And if purchases meet those standards, it's totally OK to make them without consulting the other person. But if this is joint money and it goes over an amount that you guys can comfortably afford to spend without thinking, or if it goes over an amount that you guys can comfortably afford to spend without making a collective decision, that means they feel totally empowered to decide your financial future without you, even if it comes in an exciting package. This can happen with roommates, too.

For example, you and your roommate could decide on a budget for the kind of furniture you need, and they can decide to get a bigger ticket item and expect you to still pay half. They can make decisions about the household that go beyond the budget you're comfortable with without feeling that they have to get your approval to do so. Relationship expert Jen Elmquist says that making these kind of big spending decisions without you is often a sign of a bigger spending problem, someone who doesn't have a healthy relationship with how they spend money, and maybe who knows on some level that if they were to ask you about this purchase you would probably say no.

And if you don't have access to all of the banking information needed to know the implications of these purchases, that is a form of financial abuse. In fact, 3 to 7 in this list are all different degrees of financial abuse as recognized by the NNEDV. On a similar note, number 4 is keeping important paperwork from you.

This can include things like your lease or mortgage, any shared bills or utilities that you're both responsible for, or basically any documentation that has important financial information for you or for which you are liable. For example, this could be a roommate who is not giving you access to the lease and perhaps charging you more than your fair share. Or this could be a spouse who doesn't give you access to your longer term investments.

This could even be someone who is putting your signature on things that you're not necessarily agreeing to. That same relationship expert, Jen Elmquist, says that hiding or intercepting bills or important documents from you is almost always a sign of a much bigger problem. It could be purely that they're trying to keep you in the dark about your own finances, but it could also be that they're hiding a financial problem, an overspending problem, a gambling problem, basically any problem that they know that if you had a full understanding of, you would not be happy about.

You have a right to know all of your important financial information and what you're liable for. Number 5, they have rules for your spending that they don't follow themselves. Now listen, when done right in a healthy relationship, it is great to have spending rules that you both agree to and both abide by.

As I mentioned earlier, having rules around what money can be considered fun or discretionary, what money goes in a joint versus solo account, all that kind of stuff is very healthy and can avoid a situation where two people have radically different ideas of spending habits and get into tons of arguments as a result. But these rules only work if both parties follow them equally. And one huge red flag of financially abusive tendencies is setting ground rules for you that don't apply to them.

For example, not letting you have a discretionary account while they get to make all kinds of solo decisions with their money, or if they're the sole breadwinner, deciding that you get an allowance while they get unfettered access to the joint accounts. With about 22% of American divorces citing money as the primary stressor, it's no surprise that uneven ideas around money are a huge problem that should be solved upfront. And sometimes genuinely no one's at fault.

You can both have totally different approaches to money that maybe you weren't perfectly honest with each other about when you got together. But there's a very big difference between that and someone actively controlling your financial life or deciding what is or isn't allowed for you. Always make sure that any rules that are set out are rules that everyone is following equally.

Number 6, they use money to control or shame you. Now, this does have some overlap with the previous point, but it is its own thing, because someone may be shaming or controlling you with money without necessarily setting different rules for you. But when you consider that about 99% of domestic abuse cases include some form of financial abuse, you realize really quickly how those tactics specifically around money can help keep a person trapped in a bad situation.

This control or shame dynamic is a really easy one to get into when partners don't earn equal amounts of money or one partner isn't earning any money at all, for example, a stay at home parent. For example, if both parties are working a full-time job but one earns more, there could be a disproportionate expectation on the higher earner's part that the lower earner is going to take up more of the domestic tasks, even though they work just as many hours. Basically, it sets off a dynamic where the higher earner, or the earner period, has the upper hand.

And the natural feeling of guilt that some people experience from not contributing as much financially to their household can often be preyed upon by people who want to drive home that shame in order to further control their behavior and the expectations around them. This is one reason why so many financial experts stress that emergency fund that is totally yours that is separate and is easily accessible to the individual party at any time. If you are in a situation where you need to get away from someone physically, it is going to be nearly impossible to do that if you don't have access to your own money.

Or let's say you're in a roommate situation where the roommate suddenly becomes tyrannical or abusive or impossible to live with, if you don't have the sufficient funds to move out and live somewhere else temporarily, even if it's just going to your parents' house, you're basically going to be trapped there. So in addition to setting out clear financial ground rules and expectations with your partner, no matter how good your relationship is or your living situation is, it's so important to have access to that money that is entirely yours and cannot be taken away from you, because you never know when you may need it. Lastly, number 7, is they're impatient with you learning about finances or don't want you to learn about finances.

Financial literacy is unfortunately on decline, with only around 37% of people able to correctly answer five basic financial questions, as posed by the FINRA. So it's very likely, especially if you're watching a channel like this, that you are somewhere in the process of learning about money. And when it comes to long-term financial planning, for example, with a spouse, having an intrinsic knowledge of all of the various implications of your financial goals or decisions is going to be a key part of that process.

So if one of the partners is more informed about these things, it's easy for them to start taking the upper hand in all of these decisions. But remember that in a couple where your finances are shared and so is your future, it is always your right to be a part of these decisions. So if your partner wants to keep you in the dark about these things or doesn't want to be patient enough for you to learn, if they say, oh, I'll make the investment decisions.

You don't know about that stuff. It's too complicated for you. You're bad at math, or whatever they say, that is them overstepping their bounds and not treating you as a valued member of that partnership who should be part of these decisions.

There is a huge learning curve, and particularly women were not taught a lot about managing their own finances growing up. So you need to make sure that your partner is someone who is OK with you being on a learning curve and who is patient enough to allow you to learn, provided you're willing to put in that time, so that you can make your decisions together. The idea of a man being the default party to make all the long-term financial decisions is over.

Both parties are entitled to that. And if you have a male partner, for example, who says, oh well, no, that's the man's job. That's how I was raised.

That is a red flag. And if anyone ever says that because of your gender or your age or any other factor, that you can't learn about money or you can't be good at money, that's a huge red flag, too. A good partner is one who always wants to help you learn, including about money.

Long story short, there are all lines of red flags in all kinds of different relationships when it comes to money. Your friends, your roommates, your partners, your family members can all be sources of financial tension, or even potentially financial abuse. And sometimes, yes, both parties are at fault and you're just bad with money in different ways and not great at talking about it.

But sometimes it really crosses the line and becomes a situation you have to be wary about. So always feel empowered to say, hold on a minute, that doesn't feel right. And do some research about what these red flags entail, and know your rights.

And most importantly, make sure every relationship is an open line of communication in which you feel totally comfortable being honest about your financial realities, even something as simple as not being able to afford a night out. Because if you can't be honest, you can't have a healthy relationship. As always guys, thank you for watching, and don't forget to hit the Subscribe button and to come back every Monday, Tuesday, and Thursday for new and awesome videos.