Next to having children or purchasing a home, combining finances is a major question couples must address during the course of their relationships.
A new study by the University of Georgia found that moving in together was not enough of a reason to merge finances among married and cohabiting couples. Couples both pulling in incomes were 50% more likely to split accounts.
In data released this week, having two sources of income made couples more likely to split their finances.
Other data indicates that younger Americans are less inclined to combine accounts. According to a Bankrank survey,50% of Baby Boomers are inclined to combine accounts, compared to 45% of Gen Xers, 33% of millennials and 26% of Gen Zers.
“I just always assumed, based on my family background, that couples always pool their money. If they were married, they just pooled assets and income and made joint decisions,” study co-author John Grable, professor in UGA’s College of Family and Consumer Sciences, said in a news release. “That’s not always the case, and this study shows we can actually identify groups of people or profiles of individuals and couples where pooling resources is not as common.”
The authors weren’t surprised that those who are married were 4.5 times more likely to pool finances than those who were cohabitating. They also said that couples with at least a bachelor’s degree were less likely to share accounts.
The authors were surprised that a couple’s net worth had a significant impact on their likelihood of combining accounts. The study found that couples with a positive net worth were more likely than those with a negative net worth. A positive net worth is defined as having more assets and cash than debt.
“To me, it was interesting that it wasn’t driven primarily by income. It wasn’t necessarily the level of debt that mattered, but the net worth,” Grable said. “And debt could include credit cards, student loans, auto loans, mortgages, those kinds of things.”
The researchers noted that open conversations are necessary on how to manage accounts.
“Agreeing on spending mattered a lot,” study co-author and financial planner Michelle Kruger said in a press release. “That’s a good thing. That’s something we want couples to factor in when they are making decisions about how to manage their money, whether that’s together or separate.”
Grable noted that married couples who pool accounts tend to have more stable relationships.
“If a couple decides because they don’t agree on spending to kind of keep things separate, that’s a potential warning sign there might be stability issues or power structure issues within that couple,” he said. “It’s not something to be alarmed about, or a predictor of divorce or separation, but it is something to consider.”
Bank of America offers tips for couples on its website on whether to combine bank accounts. It says the pros of having a joint account include simplifying bill payments, making monitoring spending easier and fostering shared decision-making. The cons include reducing individual privacy, allowing withdrawals without joint consent and subjecting full balances to creditors.
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