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The impact of financial literacy in relationships is oftentimes underestimated. It is detrimental to a relationship if there is lack of understanding or appreciation of financial principles by either party. In fact, studies have shown that financial issues are the leading cause of stress in relationships. One survey conducted by SunTrust Bank found that as many as 35% of respondents believed that money was the major cause of friction in their relationship. Another study indicated that couples who fight about money early in their relationships. Regardless of their debt burden, income and net worth, were more prone to divorce. In many cases, the cause of financial tension in a relationship stems from impaired financial literacy by both or either partner.
What is Financial Literacy?
Financial literacy is “the possession of knowledge and understanding of financial matters.” This understanding of financial principles can improve the relationship between couples. Without a proper understanding of how money works, people are likely to make poor financial choices. In a relationship, poor financial decisions not only affect the decision maker, but also affects the other partner as well as all other family members, and especially children. However, if both partners have a clear understanding of how their financial choices affect things. It is more likely that their decisions will have a positive impact in the relationship.
Financial Literacy Makes For Relationship Literacy
Often times couples do not agree on financial matters because of differences in socialization and differences in belief about how finances should work. Financial literacy can help individuals to gain knowledge about concepts such as saving, debt management, investing, preparing for retirement, insurance and so on. With increased knowledge in each of these areas. Couples are more likely to agree of what are the right decisions to make in order to end up in a better financial position.