Empowering the Freelance Economy

In debt and dating? How to approach the money talk

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Talking about money when you are on one of those loved-up first dates is like ripping off a plaster on a healing wound. The damage may leave a scar on your blooming relationship. But when you avoid the subject of money early on in dating you risk more down the line: a broken heart and bad credit.

More people are dating later in life, so that makes the topic of debt in the dating world even more complicated. Many people could have had previous marriages or long-term relationships that likely involved debts or joint financial responsibilities like the mortgage on the family home, alimony and child support. Don’t think for a minute that we are less prone to heartache or bad debt later in life.

What this report covers:

  • Do debts really make someone undateable?
  • How to protect yourself if you love someone who is heavily in debt
  • How to approach the money talk when you first start dating
  • How to get your debt under control before it stifles your dating cred

Do debts really make someone “undateable”?

A survey of 2,000 people by Opinium for Hargreaves Lansdown in September 2021 revealed the following views:

  • Only one in five people would date someone with financial problems (19%). 54% said they definitely wouldn’t and 27% don’t know.
  • Men are far more likely to overlook financial issues: 24% said they’d date someone with money problems – compared to 14% of women.
  • The older people are, the more off-putting financial problems are. Only 7% of people aged 55 and over would date someone with money issues, compared to 27% of those aged 18-34.
  • Those who are divorced are least likely to consider it – with only 5% saying they’d date someone with financial problems.
  • The higher people’s income, the more likely they are to consider it. 64% of additional rate taxpayers would, compared to 38% of higher rate taxpayers, 16% of basic rate taxpayers and 11% of non-taxpayers.

If you are on the dating scene or considering venturing into it, you may also have to consider some home truths about your own financial health. On those first dates, it can be all smoke and mirrors. Single parents especially will be struggling to make ends meet if they are contributing to two households, so keeping up appearances will only bite you back in the end.

Both people involved must get to grips with whether each other’s indebtedness and spending habits are a sign of trouble. Any extremes in debt, spending or miser-like stinginess will be a nasty surprise down the road leaving a raincloud hovering over the relationship. If children are involved it is a no-brainer that you must have your debt due diligence sorted before getting serious with someone and sharing financial responsibilities.

“Dating is difficult enough without dragging money worries into it,” says Sarah Coles, senior personal finance analyst, Hargreaves Lansdown. “If someone is carrying big debts or struggling to live within their means, it could devastate their love life, because only one in five people would consider them a potential date, and more than half would drop them like a stone,” she says.

It’s easy to see why daters aren’t keen to match with someone who will make their life more difficult and complicated financially. It’s also perfectly understandable that the less you earn, the less likely you are to consider it.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown

If you’re already having to work hard to make ends meet, says Coles, there’s a much bigger risk that someone else’s problems could push you under.

“Higher earners, by contrast, might feel they have space in their budget to cope. The fact that women tend to earn less on average might also help explain why they’re more wary about taking on a partner with money worries,” she says.

What if you love someone who is heavily in debt?

If you know that the person you are dating has financial problems, you may want to date them anyway. Love does that. Most entrepreneurs and freelancers, however, at some point have to put up their home as collateral or put in some serious savings in those first years as a startup.

A fellow freelancer or entrepreneur may have a different idea of what risky debt is and be more understanding than most about debt. But you can’t fall into the trap of giving a fellow freelancer free housing while they build their business. The last thing you want is to be left high and dry funding someone else’s dream if the relationship breaks up. If they are not contributing proportionally to their earnings, then you might need to discuss how you have an upside or are gifted an equity stake in their venture. Well, that is, if it has legs.

If things get really serious, you may also have to consider a will being drafted up so that your contribution to a business, whether reported on the business books or not, is not all for nothing with the benefits going automatically to whoever is on your partner’s old will and testament.

It is paramount that if business debts are co-signed, you get advice from an accountant and probably request that the business be placed in a limited company structure rather than as one of a sole trader so that business liabilities and personal assets are protected and separate.

If you have met someone that you feel in your bones is not being truthful with their spending or debts, this could ring alarm bells. Going with your gut can pay off when entering the “shark-infested dating pool” as Coles coins it. Best to use that sixth sense earlier than later.

Nobody wants to go to endless hours of trouble perfecting profile photos, engaging in witty chat, and braving the stress of a first date, just to be undone by a poor credit record. If you’re concerned about the impact your finances could have on your love life, there are also steps to make yourself more datable, too.

Sarah Coles

Photo by Pavel Danilyuk from Pexels

How to approach the money talk when you first start dating someone?

  1. Don’t wait until you’ve already committed. You need to know where you stand well before then.
  2. If it’s a struggle, start with one of the less scary aspects of finances, like whether they’re a spender or a saver, or what they dream of achieving with their money.
  3. But in the end, you’re going to have to cut to the chase, and ask them straight out whether they have any money concerns, including debts, overspending or things like gambling.
  4. Be honest about your own circumstances. It’s easier to ask someone to be open about money if you’re willing to be, and it can help if you admit to your weaknesses too.
  5. Try not to react immediately to their answer. It’s not necessarily what you want to hear, but you need time to process what this means for you before you make any decisions.

🧿How to protect yourself when things start to get serious

Coles offers these tips:

Use direct debits: If you’re living together, you want to be sure that all the bills are covered. You can either share direct debits fairly from both of your accounts on payday, or your partner can set up a direct debit to you and you can cover the bills. That way they’re the first thing that’s paid every month. However, you need to be certain that their problems aren’t so bad that payday just brings their current account back to zero – or less.

Tackle really serious financial problems: If they’re in financial trouble, you need to make some decisions. Are they prepared to tackle their problems? Are you willing to make compromises while they do this? And what will you do if they fall short? If this is linked to a wider problem, such as addiction, it’s not going to be an easy problem to solve, so if you want to stay together, you need to be prepared for ups and downs.

Think carefully before moving in together: If they’re not getting to grips with financial problems, it becomes even more of an issue if you want to move in together. At that point you need to know where you stand and then make a decision: can you cope financially if they can’t pay their way, and are you prepared to do so? These are two separate issues, and you shouldn’t feel under pressure to say yes to either of them.

Consider carefully before you take out joint financial products: If you have joint financial products, your credit records will be linked. This doesn’t happen automatically when you move in together, but if you have a joint account or any other financial products together, a link will be formed. It means if your partner makes financial mistakes and runs up debts or misses payments, it will affect your ability to borrow. If you are moving in with someone who has a history of credit problems, think carefully before taking out any products that will link you. While joint accounts for bills can make life easier in general, if one of you has a terrible credit record it can cause more problems than it solves.

Be very wary of joint credit cards: Some couples will both have a card on the same account. This isn’t a joint credit card, because one of you will have an account and the other will have a second card on it. Whoever’s name is on the account is responsible for the entire bill, so it’s usually best avoided.

Consider the property: If you own your home, and they’re moving in, if your partner makes financial contributions towards the property or mortgage, or helps to add value to your home, then if you split up, they can apply to the court for an ‘interest’ in the property. The courts would then decide whether they have the right to some of the value. You might think this couldn’t be an issue, but if the relationship breaks down, and they see it as a way to solve their financial problems, it’s a risk. If you’re unhappy running this risk, you can consider drawing up a cohabitation agreement.

Draw up a prenup: If your partner has debts, or historic problems with debts, and you’re getting married, you can help protect yourself with a prenup. These aren’t legally binding, but as long as you both get independent legal advice, and explain why you want to divide the debts this way, they will be considered by a divorce court. You will still be responsible for any joint debts, but you can lay out how you want to deal with pre-existing debts or debts they run up in their own name.

🤟How to get your debt under control before it stifles your dating cred

  1. Start by controlling your debts: if you have large, expensive, short-term debts, then getting on top of them should be your first priority. Start with what you owe, and the interest rate you’re paying on it. Then look at the costs you can cut to free up cash to pay a chunk of your debt off each month. This could include switching to somewhere with a lower rate so you’re paying less in interest each month, but don’t use this as an excuse to borrow more. You need to keep making minimum payments on everything, but after that set up a direct debt on payday to pay down your most expensive debt, and gradually work through paying them all off.
  2. Consider protection – no one is immune to something going wrong, and if something happens to you, it can hurt your loved ones. If there’s anyone in your life that relies on you – including children – you should consider life cover and insuring your income if you can’t work.
  3. Save for a rainy day – it’s impossible to predict what nasty surprises life holds in store, so it’s important to get ahead of the game by building a cash buffer for unexpected emergencies. As soon as you are on top of your debts, you can redirect your monthly direct debit into an easy access savings account to build up your emergency fund.
  4. Plan for later life – we can’t just focus on what’s around the corner, so we need to think about the long-term too. Getting to grips with your pension and making sure you’re building a large enough pot for retirement will help protect you when you finish work.
  5. Invest to make more of your money – once you have built your short-term resilience and are confident in your pension savings, you can consider investing, which gives you the opportunity to make your money work harder for you.

Source: Hargreaves Lansdown

💌 What would you do to protect yourself if you fell in love with someone in serious debt?

💌 Do you think freelancers have to be more vigilant about the money talk?


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