Couples who are transparent about their financial situation tend to have a better chance of making it, according to two studies released this year. But with that in mind, there appears to be some stark generational and gender differences in the results based on their financial habits. For example, nearly a third of men surveyed admit to hiding credit card balances, while Gen Z and millennials tend to be far more dishonest about their finances.
However, according to Val Greer, executive vice president and chief commercial officer of Bread Financial, being more open about your finances does not necessarily align with a relationship’s harmony and bliss. Ms. Greer told The Epoch Times that while communication is vitally essential, conflict can also arise when information is exposed. “Our survey data reveals frequent financial discussions can lead to more arguments, with 39 percent of millennial couples expressing this was the case. Therefore, it’s essential to approach financial conversations with sensitivity and understanding,” she said.
Bread Financial, a financial services company providing consumer financial solutions, released its study earlier this year to determine what economic attributes singles see in a mate.
When Tucker Cohen was dating his then-girlfriend a few years ago, he found the whole issue of joining financial accounts so daunting that he decided to create his own app, Smoov, which will appear in the Apple App Store in the next few months. The app is designed for couples who want to reveal some but not all of their financial data and make purchases as a couple without actually joining together bank accounts. Now married and a father of twins, Mr. Cohen told The Epoch Times that the biggest issue facing couples today is a lack of knowledge of how finances work.
“Financial illiteracy is a pandemic in this country. When you understand where they get their financial beliefs from—their upbringing, socioeconomic background, the financial status of their family, neighbors, and where they grew up—you have to ask, did these people take any financial classes in school?‘In This Together’?
But financial illiteracy aside, a study this year from Indiana University’s Kelly School of Business found that in regard to married couples, communication and economic collaboration can overcome many obstacles.
“When we surveyed people of varying relationship lengths, those who had merged accounts reported higher levels of communality within their marriage compared to people with separate accounts, or even those who partially merged their finances,” said Jenny Olson, an assistant professor of marketing at Kelley. “They frequently told us they felt more like they were ‘in this together.’Regarding generational compatibility, the Bread Financial study found that boomers believe they’ve got a good financial standing with their partners (54 percent) compared to millennials (23 percent). But this is where statistics can be deceiving because the boomers are also the least likely to share financial information with their spouses daily (13 percent).
Mr. Cohen said one thing not being discussed is that people are getting married later in life, so there’s more money in play and greater financial experience. But even with those factors, coupling incomes continues to be a complicated and not always honest process.
“I was speaking to an older millennial yesterday who has a high net worth, and her husband is in private equity. They have two kids and still have separate as well as joint accounts,” he said. “But she told me that when she talks to other women at kid pick-ups, they admit to spending money on groceries and don’t ask their husbands to reimburse the money because they don’t want them to know what they bought.”
In the Indiana University study, Ms. Olson and her co-authors recruited 230 couples, either engaged or newly married at the time, and followed them over two years as they began their married lives together. All the study couples began with separate accounts and consented to change their financial arrangements potentially. One thing they found was couples who originally had separate accounts viewed their decision-making as more of an exchange.
“It’s, ‘I help you because you’re going to help me later,’” she said. “They’re prepaying for later favors, and that’s tit-for-tat, which we see a bit more with separate accounts. It’s ‘I’ve got the Netflix bill and you pay the doctor.' They’re not working together like those with joint accounts—who have the same pool of money—and that’s more common in business-type relationships.”
Ms. Olson added that the biggest downfall to holding separate accounts, according to her study, was finding that couples might find it easier to leave the relationship. Twenty percent of the participating couples did not finish the study, with a significant percentage splitting up after not merging bank accounts.
