Be my Valentine? Financial baggage is a relationship deal breaker among young adults
The future of your relationship may not be written in the stars, but rather in your credit report.
Half of millennials and 62% of Gen Zers said they would think twice about starting a relationship if the other person has debt or financial baggage, according to data from Bank of America shared exclusively with Yahoo Money.
Almost two-thirds of millennials and more than three-quarters of Generation Z said that financial stability was a must for a new partner.
These priorities underscore how many young adults watched their parents weather the Great Recession, instilling in them the importance of financial security, said April Schneider, head of consumer and small business products at Bank of America.
“Millennials are truly balancing it all,” Schneider said. “They juggle debt with both near and long-term financial priorities, like buying a home, getting married, starting a family and saving for the future — and they’re finding it difficult.”
Bad credit is also a deal breaker
The findings from Bank of America echo other recent surveys.
For instance, a third of adults between 18 and 34 said student or credit card debt could affect who they choose as a partner, according to LendKey, a lending platform.
“People want better control over their life,” said Christian Widhalm, chief revenue officer at LendKey and author of the report. “They feel they can have more control over their life if they don't have as much debt they are burdened by either by themselves or their spouse.”
But credit history is an even bigger deal breaker. Young adults are more likely to accept a future partner who carries student debt rather than one with a spotty credit, according to LendKey.
This is partly because it’s harder to find someone without student debt in this age group, Widhalm said.
Credit scores also may predict how long your marriage will last. Couples with larger gaps between their credit scores at the beginning of a relationship are more likely to separate in the future, according to a 2015 paper by the Federal Reserve Board.
Delaying traditional milestones
The increasing desire for financial security in potential partners comes at a time when it’s taking much longer for young adults to reach financial independence from their parents. Only 1 in 4 young adults in 2018 were financially on their own by 22, down from 1 in 3 in 1980, the Pew Research Center found.
Starting a household and getting married are more scrutinized by 18-to-34-year-olds as they make decisions about their life, Widhalm said. One in 3 said they might postpone marriage or have already done so until their student debt is paid off, according to LendKey.
“There are a lot of emotions that are tied to financial stability and financial security,” said Faisa Stafford, president and CEO of Life Happens, a nonprofit, which released a similar study on delaying milestones.
Young adults feel personally insecure about their finances or careers, which is making them postpone certain life events, the Life Happens survey found. Student debt is also a big burden for them with half of the respondents delaying those milestones because of it.
“‘Financial baggage’ in a partner, such as high debt, could produce anxiety in that it might impact the progress towards those goals,” Bank of America’s Schneider said. “Debt, in particular, remains a pressing reality, with as many as 76 percent of millennials carrying debt of some kind.”
Denitsa is a writer for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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