There’s only one problem: It’s bad relationship advice.
If you want to maximize your chances of happiness and togetherness, merge your finances. That’s the upshot of a paper recently published in the Journal of Personality and Social Psychology, which found that joint financial resources are more likely to lead to greater relationship stability.
“People who pooled everything were the most satisfied. People that pooled nothing were the least satisfied. The people who had this hybrid — where they pooled some (money) and not other — were in the middle,” says Emily N. Garbinsky, an associate professor at Cornell University’s business school and one of the study’s three authors.
It sounds like so much common sense. So why did we ever think otherwise? The early advice can be traced at least to the 1970s, when feminist progress met self-actualization. Only with passage of the Equal Credit Opportunity Act in 1974 did married women get the right to establish credit apart from their husbands.
True, it was whispered wisdom that a wife should squirrel away cash just in case, but that was a far cry from maintaining semiseparate finances.
As women entered (and reentered) the workforce, some were encouraged to place earnings in separate accounts. It would give them security if the marriage ended — the divorce rate peaked in the late 1970s and early 1980s — and avoid the significantly weakened financial position endured by many women who were dependent on their husbands.
But this practice of making people feel safe financially has the perverse effect of actually leaving them less so. Married couples who pool their funds are less likely to divorce. A study published in the journal Family Relations more than a decade ago of how low-income couples found that “joint bank accounts are associated with higher levels of relationship quality” and that women, especially, were less satisfied when the finances were arranged in what the researchers called an “individualistic” way. (And, yes, if you pool money and then go to separate accounts, that is a red flag.)
This thinking has broken down along generational lines over time. Millennials, for instance, are increasingly inclined to favor separate finances: Almost one in three couples of that generation keep their finances separate, compared with a little more than 10 percent of Gen Xers and baby boomers, research conducted by Bank of America found in 2018.
As couples form at older ages, the research found, they’ve established separate financial lives and don’t want to fully merge them. There’s also the fact that many women under 30 earn more than men the same age.
But conflict over finances is also the leading cause of squabbles between couples. Keeping some things separate appears likely to reduce arguments — no need to mention the cost of those scalped Coachella tickets to the partner! — but the need to proactively coordinate finances can create opportunities for disagreement, too.
There are, of course, serious reasons to keep finances separate. Couples in which one partner has a large debt ought to think very hard before merging money. Older couples with families from previous relationships are also often counseled to keep stuff separate.
There’s no simple formula to determine how much couples should contribute to joint expenses or even what constitutes a cost that should be shared. Couples rarely earn the same amount, and which person pulls in the larger salary can change over time. It’s easy for things to somehow appear unfair to one partner, but not the other.
When writing a personal finance column, I heard for years about the tensions negotiating over expenses caused. I also learned that power plays by the partner bringing in more are not uncommon. More often than not the female partner eventually finds herself on the losing end when that happens. That’s not surprising because it’s usually women’s pay that takes a hit when a couple has children and child care is often the female partner’s responsibility (evidenced once again by the large numbers of women who left the workforce after covid hit).
Often I found myself advising people that if someone was irresponsible or controlling with money, they weren’t going to change simply because their partner kept some financial independence — and that this was probably a warning sign of problems down the road.
A partnership is an expression of dependence and trust, of being in life together and facing the world as one. If you can’t commit your finances to your other half, or vice versa, it might be time to think on why one of you isn’t fully invested.
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