Financial harmony is a key pillar in any successful relationship, yet it’s often overlooked or shrouded in discomfort. How couples manage their finances can significantly impact the overall health and direction of their partnership. Therefore, it’s essential to engage in open and honest discussions about financial habits, goals, and expectations.
The following questions are designed to probe the depths of financial compatibility between you and your partner. They offer a comprehensive guide to understanding each other’s financial perspectives, laying a foundation for mutual respect, aligned goals, and a harmonious future together.
1. How Do You Manage Your Finances, Including Both Savings And Spending?
Understanding each other’s approaches and underlying philosophies regarding money management is crucial in assessing financial compatibility.
Does one prefer more frugal living, saving, and cutting unnecessary expenses, while the other enjoys splurging on experiences or luxury items? These habits can reflect broader values and priorities, making understanding and respecting each other’s preferences crucial.
The conversation should also explore the tools and methods used for financial management. Do you use budgeting apps, spreadsheets, or ledgers? This aspect reveals how you track and control your financial flows, providing a window into your organizational skills and attitudes toward money.
Moreover, this can lead to practical decisions about budgeting as a couple. It’s an opportunity to align on a spending plan that accommodates individual desires and joint financial health.
2. What Are Your Short- And Long-Term Financial Goals?
Short-term goals are those that you wish to achieve within a year or two, such as saving for a vacation, purchasing a new gadget, or paying off a small debt. They reflect your current priorities and lifestyle choices.
Long-term financial goals, on the other hand, are about the bigger picture and future planning. These include buying a house, saving for retirement or children’s education, or building an investment portfolio.
Consider how these goals align with your current financial situations and what adjustments are necessary to achieve them. For instance, if one partner dreams of early retirement while the other is focused on investing in a start-up, how do these distinct goals coexist and complement each other in your joint financial planning?
Moreover, this conversation is about setting goals and devising a concrete, actionable plan that includes regular saving habits, investment decisions, and even lifestyle adjustments. Aligning these financial aspirations and strategies is essential for building a future both partners are invested in and excited about.
3. How Do You View And Manage Personal Debt?
For some, carrying debt is a normal part of financial life, used to build credit or make significant purchases like a home or car. For others, debt might be a source of stress, and they may prioritize paying it off as quickly as possible.
It’s important to discuss the types of debt each person might have, such as student loans, credit card debt, or mortgages. How do you approach paying off these debts? Do you make minimum payments, pay extra to clear debt quickly, or have a structured plan for debt reduction? This discussion can also extend to future debt, like willingness to take on a mortgage or loans for other significant investments.
Moreover, how each person views debt can impact major life decisions and day-to-day financial management. The key is to develop a mutual understanding and strategy that respects both of your comfort levels and financial goals to ensure that debt doesn’t become a point of contention in your relationship.
4. What Are Your Strategies And Attitudes Towards Investing?
Their investment approach can reveal much about a person’s risk tolerance and long-term financial planning. Some might be aggressive investors, comfortable with high-risk, high-reward scenarios, while others may prefer conservative, low-risk investment options like bonds or savings accounts.
Discussing investment strategies involves understanding your knowledge level, interest in financial markets, and investment goals. This conversation can also highlight how much each of you is willing to allocate towards investments from your incomes, balancing between immediate financial needs and future gains.
Remember that it is not about convincing each other of the right way to invest but rather about understanding each other’s comfort levels and finding a mutual path that aligns with your financial goals and risk tolerances. It’s an opportunity to learn from each other, diversify investment approaches, and build a unified strategy for financial growth.
5. How Open Should You Be About Your Finances?
Probe into how forthcoming you and your partner are about your financial situation. Gauge each other’s perspectives on sharing sensitive financial information, including salary details and savings accounts to debt levels and investment portfolios.
Are there hesitations or concerns about revealing the full extent of your financial situations? How do you feel about discussing potentially challenging topics like outstanding debts or significant assets?
The degree of transparency lays the groundwork for mutual trust. It fosters a deeper level of partnership where financial decisions are made collaboratively.
6. How Should Financial Responsibilities Be Divided Or Shared In Your Relationship?
You should explore various aspects, from paying bills, contributing to savings and investments, and managing household expenses. This also extends to handling unexpected financial situations, like emergencies or sudden expenses.
The conversation should consider different models of financial contribution: Is it based on each person’s income proportionally, or is there a preference for an equal split regardless of earnings? Should you keep individual or joint accounts? How do both partners feel about contributing to shared goals, like saving for a house or planning vacations?
Furthermore, discussing the division of financial responsibilities is about finding a comfortable system for both parties. Whether it’s having individual, joint, or hybrid accounts, the goal is to respect each person’s contributions and maintain balance and fairness.
7. What Are Your Views On Supporting Family Members Financially And Engaging In Charitable Giving?
It is essential to understand shared values and priorities in a relationship. This question goes beyond mere financial planning; it touches upon deeper aspects of generosity, responsibility, and personal values. It involves discussing how each of you feels about providing financial assistance to family members, whether for regular support, in times of need, or for specific goals like education.
This conversation should also extend to attitudes towards philanthropy and charitable contributions. Do both partners prioritize giving to causes or organizations? Is there a preference for local, national, or international charities? How does each person decide the amount and frequency of their donations? These choices often reflect personal convictions and ethical considerations, making it a significant topic of discussion for couples.
Balancing financial support for family and charitable giving with personal financial goals can be complex. It requires careful consideration and open communication to ensure that these decisions align with both individual and shared financial plans.
Each of these seven questions opens up avenues for deeper understanding and mutual growth. They are transformational, offering a chance to build a shared financial vision grounded in trust, respect, and aligned objectives.
This dialogue is an ongoing process. Financial situations and goals evolve over time, as do individual perspectives. Continual communication is key. It’s about finding a balance where both partners feel heard, respected, and supported in their financial choices.
In the end, these conversations are not just about securing financial health but also about strengthening the foundation of the relationship itself. By confronting financial issues openly and constructively, couples can build not just wealth, but also a deeper, more resilient bond.
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eCommerce Platforms Make the Leap Into One-Stop-Shop Embedded Trade Finance
For the merchants doing business online, serving consumers and even buying goods and services from one another, working capital is a lifeline. Working capital provides the ready cash needed to buy inventory, pay staff and take advantage of growth opportunities.
A number of eCommerce platforms have made the leap into providing capital to those businesses — a form of embedded finance — along with, in some cases, virtual cards.
As we noted here this past week, Home Depot said it was piloting trade credit options, and management said that HD Supply (which Home Depot acquired in 2020) already offers that function. Commentary on the earnings call noted that the piloted options are part of “enhanced digital capabilities,” which we’d contend is a nod to the fact that online/platform channels are becoming key ways to reach those smaller businesses.
Elsewhere, in its latest 10-K filing with the Securities and Exchange Commission, PayPal detailed that it offers access to merchant finance products for smaller businesses, including PayPal Business Loans. The latest holdings on the balance sheet stood at $1.2 billion in receivables.
Launching Credit Options
Shopify said last summer that it had launched Shopify Credit, a pay-in-full card for Shopify merchants, with the ability to earn cash back and issue cards to enterprises’ staff members (along with spend limit features). The latest corporate filings reveal that, overall, Shopify’s loans and merchant cash advances, on a net basis, were $816 million at the end of 2023, up from $580 million.
We’ll know more about the state of merchant financing when Block reports earnings tonight (Feb. 22). As we noted in our coverage of the latest stats, in Block’s earnings results, the company noted in its investor materials that Square Loans facilitated approximately 120,000 loans totaling $1.17 billion in originations, up 4% year over year.
The platform models offer these smaller firms — already establishing storefronts and a digital presence online as they seek to broaden their reach — a range of embedded finance options.
And as PYMNTS Intelligence data has found, a significant percentage of Main Street SMBs have been moving online at the end of last year, even if they have brick-and-mortar locations.
The companies that are online are sanguine about their prospects: 57% for those who sell mostly online (and conceivably on platforms) say their revenues will grow this year, and that tally rises to 61% that have an even split between eCommerce and physical locations.
Elsewhere, we noted that only 47% of SMBs with annual revenues of $10 million or less had access to business or personal financing. That leaves roughly half without access, and 8% of SMBs have access to only personal financing. Almost half of Main Street SMBs say they plan to increase the use of credit products headed into 2024 — setting the stage for the platforms to see some gains in their embedded finance businesses.
AI Will Transform Finance, But Not With Personalised Card Offers
If you read any business or finance news, you would have found it impossible not to notice that there was another Davos last month. I rather agree with Andrew Curry, who says that the worst thing about the event is the temptation to take it seriously, but business leaders do turn up there to make speeches and it can be useful to listen to them to spot key themes. This year, as would expect, artificial intelligence (AI) was centre stage.
AI Is The Future of Fintech
Bryan Zhang (the executive director and co-founder of the Cambridge Centre for Alternative Finance at The University of Cambridge Judge Business School) presented the results of their research on the future of global fintech. The study gathered data from 227 fintechs across five verticals (digital lending, digital capital raising, digital payments, digital banking & savings and insurtech) across the Asia-Pacific, European, Latin America and Caribbean, Middle East & North African, North American and Sub-Saharan African regions. Almost three-quarters of those surveyed identified AI as the most important factor in the development of fintech in the next five years (and almost half of them pointed to embedded finance, open banking and the digital economy as the second most important factors).
I think these findings are uncontroversial. We can all agree that the fintech sector is poised to be significantly transformed by advances in artificial intelligence (AI) across a number of areas. But how, exactly? And where will the biggest impact be? Scanning through various reports, news feeds and post I can see a number of key business functions that will be affected. Here are a few of them:
Personalised Banking and Services: One of first and most obvious uses of AI, building on the masses of historical data available to banks, will be to push much more personalised products and services to customers. AI can help banks and their fintech competitors to create tailored offerings for each individual, ranging from from customised credit cards to unique savings plans;
Regulatory Compliance (RegTech): AI will help in the development of systems that can automatically adapt to new regulations and ensure compliance more efficiently. In my view, the next really big fintech businesses will actually be regtech businesses and AI is certain to power them;
Enhancing Robotic Process Automation (RPA): In their book “The Future of Finance”, Henri Arslanian and Fabrice Fisher pointed out that while automation can be enabled with relatively unsophisticated RPA technology, for more complex processes with more varied inputs, more sophisticated techniques are needed. Thus AI, combined with RPA, will result in cost savings and increased efficiency for financial institutions;
Credit Decisions and Risk Management: AI systems will help financial institutions make better lending decisions and manage risk more effectively. As a result, the market is moving towards insights-driven lending rather than expert judgement, which helps maximise rejection of high-risks customers and minimise rejection of creditworthy customers;
Investment and Trading: Mihir Desai, a Professor of Finance at Harvard Business School, points at two significant disruptions: the rise of passive fund managers and the growing dominance of quantitative investing because of the ability to analyze large amounts of data quickly. He thinks that these trends in finance suggests that an AI-dominated future can create “outsized” winners and losers pretty quickly;
Customer Support and Chatbots: AI-powered chatbots and virtual assistants will become more nuanced and capable of handling complex customer service inquiries, providing instant support and freeing up human resources for more strategic tasks. Personally, I am interacting with a bank chatbot, I don’t really care whether it is a person or not provided it does what I want; and
Fraud Detection and Security: I think this area is particularly concerning, because of the tidal wave of fraud that AI will unleash and the corresponding fintech opportunities to harness AI to get us to higher ground, as discussed in the recent U.S. Financial Services Committee hearing about the opportunities and risks associated with AI.
All of these uses of AI are, frankly, pretty unremarkable. But I think what a lot of this kind of analysis lacks is a recognition of the fact that it is the customers’ use of AI that will take the sector in some unexpected directions, not the banks’ use of AI. As I have written here before, financial services organisations need to pay strategic attention to the impending switch from human to machine customers.
Persuade My Bot!
The brilliant Cathy Hackl wrote about this a few years ago, noting that traditional marketing is all about the consumer, so marketers spend their effort of creating compelling narratives to connect with those consumers. Their goal is just to create demand for a product to but to build brand and relationships. That’s great for B2C and B2B2C, but what happens when we find ourselves in the world of Business-to-Robot-to-Consumer (B2R2C) commerce?
What happens to the accumulated knowledge and experience of the marketing department in a retail bank when banks will have to convince robots – rather than humans – that their deal is the best in the market? The robots won’t care about the Superbowl commerical. The robots won’t care about the race team sponsorship. The robots will be supremely indifferent to the brand colour and logo.
But what will they care about?
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