Gen Z, millennials say money talks should happen before the relationship gets serious, study finds

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While most Americans say couples should talk about money honestly before living together, Gen Z and millennials believe the conversation should happen way sooner.

Nearly a third, 32%, of Gen Z adults and 40% of millennials say an honest conversation about your finances and long-term goals should happen before a relationship gets serious, according to the 2023 Planning & Progress study by Northwestern Mutual.

The study is based on 2,740 online interviews among U.S. adults conducted Feb.17 to March 2.

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These two generations have experienced several bouts of market and economic turmoil during their formative years, from the Great Recession of 2007-09 to the Covid-19 pandemic.

“Millennials and Gen Z [are] living through a lot of different events, perhaps very, very quickly. It’s making it a really important conversation for them,” said certified financial planner Kyle Menke, founder and CEO of St. Petersburg, Florida-based Menke Financial, a Northwestern Mutual-affiliated firm. 

Money, while certainly not the most important thing in life, has a significant impact on a lot of different areas.

Kyle Menke

certified financial planner

Why it’s important to have a relationship money talk

Being open and honest with your partner should be central in the language of love, experts say, and that includes talking about money.

Across all generations, 72% of Americans believe couples should talk about their finances before living together, Northwestern Mutual found.

“Money, while certainly not the most important thing in life, has a significant impact on a lot of different areas,” Menke said.

For instance, your prospective partner may spend and manage their money completely different from you, said CFP Sophia Bera Daigle, the founder of Gen Y Planning in Austin, Texas. She’s also a member of the CNBC FA Council.

“Not enough people think about that before they move in together and before they start to think about a life with this person,” Daigle previously told CNBC.

More than a third, 32%, of Gen Z couples have found it difficult to strike a balance of how to split expenses when they have different incomes, Northwestern Mutual found. Similarly, 31% say they have different tolerance levels for financial risk, which has made investment decisions complicated.

A February survey by Bread Financial found that 64% of couples say they are “financially incompatible” with their partners, with 18% of Gen Z and 17% of millennials citing the incompatibility as a primary reason to break up.

Having the money conversation early on in the relationship can help you figure out if the other person’s habits and goals align with yours, Menke said.

“Finding out if you are compatible has a lot to do with the success of long-term relationships,” he said. 

If partners make it a habit of talking about money, their financial compatibility may improve as time goes by. Northwestern Mutual found that couples who have been together for five years are more likely to report becoming more financially compatible. Baby boomers were the most likely to see eye-to-eye on their finances. 

“Baby boomers have had these conversations, whether it was prior to marriage or after marriage. At some point, those conversations came up and they worked through those pieces,” Menke said. “It’s important that clients are having those conversations right out of the gate.”