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Should Couples Blend Their Finances or Stay Separate?

Tips on how couples can give each partner some discretion to manage their own spending through joint and separate accounts.

Illustration of piggy bank with bills and coins floating into the slot

On this episode of The Long View, Scott Rick, author and associate professor of marketing at the University of Michigan’s Ross School of Business, discusses how couples approach finances and different money personalities from his new book, Tightwads and Spendthrifts: Navigating the Money Minefield in Real Relationships.

Here are a few excerpts from Rick’s conversation with Morningstar’s Christine Benz and Amy Arnott.

Should Couples Blend Their Finances or Stay Separate?

Christine Benz: You studied whether a couple should blend their finances or stay separate. Can you talk about what you found there?

Scott Rick: We did an experiment with engaged and newlywed couples who had separate accounts, and they were open to what they wanted to do long term. They were kind of undecided. So, we paid them to either adopt a joint account, merge their money into a joint account, or keep things separate, or do whatever they want. And then we followed them for two years. We checked in with them. Are you still talking? Do you still like each other? Are you fighting? What we found was that the couples we prompted to open and use a joint account, they maintained their newlywed level of relationship satisfaction. Whereas the other couples had the decline that you often see, like the wedding day is often the happiest, and then reality sets in, and there’s a decline.

So, we think the joint account was doing several things. One, it was blurring income differences. Another was that it was helping to keep things what we call communal. Relationships often start communal, where I help you because you need help, not because I’m prepaying for some other favor. You don’t want to get into what’s called an exchange relationship. That’s something you might have at work with a colleague where you’re keeping careful track of inputs, and you nominate me for an award. So, next year I have to nominate you. It’s all very reciprocal, and they’re scorekeeping. And so, we think this helped couples avoid the onset of scorekeeping by turning your money and my money into our money. And it also prompted conversations; they talked more, and they got more on the same page, which doesn’t mean saving, saving, saving. It might mean, “Oh, well, maybe we can afford an extra weekend out now and then.” But we think that joint account did a lot of good for those couples.

How Couples Can Use Separate Accounts to Manage Spending

Amy Arnott: It sounds like having a joint account is probably a good idea for most couples, but you also write about how giving each partner some discretion to manage their own spending can be beneficial. What’s the best way to do that logistically?

Rick: Yes. And yes, this might all sound very ironic given what I just said, but I like having a joint account. I don’t think you should only have a joint account. The joint account is a money-laundering device. It is what collects the incoming money. On the back end of that joint account, though, there is room for separate accounts where we each get to withdraw some of our money into our separate accounts that we can use. We can each spend some of our money without the other person closely looking over our shoulder. And obviously, the joint account is there for household-level purchases: our mortgage, our rent, our utilities, and our child expenses. That’s what that’s for.

But me, Scott, for my personal everyday purchases, do I want to buy a latte at work? Or do I want to buy something for whatever hobby I have? That can be done through a separate account. And my spouse doesn’t need to see all the line-by-line details. Because once you start looking over each other’s shoulders, you’re going to disagree about how to use that money. And we have different hobbies, and I don’t understand what your hobby costs and vice versa. And I’m going to say, “Do you really have to spend that much?” And you’re going to get into unnecessary arguments that just do more harm than good.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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