It’s an age-old question: Is sharing finances with your other half a good idea? It’s a question that invokes a wide range of responses, ranging from a vehement ‘no’ to an enthusiastic ‘yes’. Such answers might be influenced by past experiences, particularly for older people entering a second or third relationship.
Despite the range of factors involved, Indiana University Kelley School of Business researchers have attempted to measure the general trend. Their conclusion, published in the Journal of Consumer Research, is that married couples who manage finances together might be happier.
The study recruited 230 couples, who were either engaged or newly married at the time of recruitment. It followed them over two years as they began their married lives together. All participants began the study with separate accounts and consented to potentially changing their financial arrangements.
Consenting to potential changes was required as the couples were separated into three groups, each provided with different instructions.
Sharing finances versus separate accounts
One group was instructed to keep finances separate and use individual bank accounts. The second group were told to do the polar opposite – open a joint account and share finances. Participants in the third group were given the freedom to choose between separate or joint finances.
The findings of the study revealed couples who were told to open joint bank accounts to be the ‘winners’. Couple sharing finances reported substantially higher relationship quality two years later than those who maintained separate accounts.
Jenny Olson, assistant professor of marketing at Kelley and the study’s lead author explained the analysis. “They [joint account holders] frequently told us they felt more like they were ‘in this together,’” she said.
According to Prof. Olson, joint account holders viewed their arrangement as a partnership. Separate account holders took a more transactional approach. Such couples viewed financial decision-making as more of an exchange, she said.
What about older couples?
It’s important to point out that the mean average age of the participants in this study was 28. What’s more, for all participants this was their first marriage and it covered only the first two years of marriage.
Follow-up studies of the same couples might provide some interesting results in the years to come. Indeed, the authors of this study revealed that 20 per cent of participating couples did not finish the study. This group included “a significant percentage of those who separated after not merging bank accounts”.
Couples who have been together for 10, 20 or 30 years might provide very different results. And those who have entered a second or third marriage or partnership might produce different results again.
Nevertheless, the results do provide some indication that sharing finances may have its benefits.
Personal finance journalist Lucy Lazarony suggests a ‘hybrid’ approach might work best for later life relationships. In other words, keep separate accounts as well as one joint account.
Whichever way you go, open and honest communication about your preferences will likely go a long way to achieving a successful financial arrangement.
Do you share finances with your partner? How well does the arrangement work for you? Let us know via the comments section below.
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