Tim and Carolyn*, both 36, were an attractive, financially successful couple when they met through mutual friends. Carolyn was attracted to Tim's generous and carefree style. He frequently bought her lavish gifts and treated a crowd of friends to drinks and dinner. Carolyn was more modest in her spending.
Before the marriage, Tim pressured Carolyn into fighting with her father about her trust fund. Carolyn resisted. She was also reluctant to pool their resources once she learned that, despite his six-figure income, Tim had little savings and a 550 credit score. Even before her parental trust kicked in, Carolyn had saved a substantial nest egg and kept her credit score hovering around 800.
Tim argued that Carolyn didn't trust him. Carolyn said she was just being "prudent."
Should they pool their resources or keep them separate?
In a study entitled "Common Cents: Bank Account Structure and Couples' Relationship Dynamics," researchers Olsen, Rick, Small, and Finkel (2023) argue a resounding "yes!" to pooling resources. They proclaim the many relationship benefits of pooling your financial resources.
The study definitively argues that you'll be happier, feel better about your household finances, and fight less about money. Rather than viewing your relationship as "transactional," pooling your money will make your relationship more communal, more like "we're in this together." That's according to these researchers.
I say "not so fast."
First, answer this question: "Would you join a study that would allow total strangers to randomly control your marriage's financial resources?"
I thought not.
But, 230 couples did just that in this study. They were directed in one of three ways: to open a joint bank account, keep a separate one, or make their own decisions. Researchers then followed the couple over the next two years.
GIGO about money
Considering that money is among the top issues couples argue about and is often a solid predictor of divorce, this is a simple solution, right? Pool it, and reap the benefits.
According to their findings:
"This is the best evidence that we have to date for a question that shapes couples' futures; and the fact that we observe these meaningful shifts over two years, I think it's a pretty powerful testament to the benefits of merging."
In computer science, garbage in, garbage out (GIGO) is the concept that flawed or nonsense (garbage) input data produces nonsense output.
I argue that this is a fatal flaw of the study.
First, there is the selection bias of people who would participate in such a study. You'd have to trust your spouse to agree to such a study. After all, you'd be "randomly assigned."
Secondly, trustworthiness is and has been a core variable in satisfying marriages and effective money management. Suppose your pool of couples is already self-selected as having an equally matched level of trustworthiness. In that case, your results will be similarly flawed.
Trustworthiness and money
The researchers suggested that given how beneficial merging money was, it "warrant[s] a conversation with your partner" about pooling resources. Of course, discussing one's economic values and spending patterns is wise.
Easier said than done.
Money conversations are challenging for many couples, and those who can have them often already have them regularly.
To suggest that all couples automatically pool their finances across the board is terrible advice.
Pick the right partner
A Forbes article once suggested that it was easier to ask your partner to get tested for sexually transmitted diseases than to ask for their credit score. But the latter might be more critical to your overall financial and relationship health.
The August 2015 landmark Federal Reserve study examining credit scores comes to mind. Instead of famously unreliable survey questions that Olsen, et al relied upon, this study examined 12 million couples over 15 years with objective financial data.
Controlling for education, race, and income, they found that picking a partner with a similar credit score is a wise decision.
A difference between partners (before cohabitation) of one standard deviation will increase the chances of separation by 30% in the first two years. That risk jumps to 37% in the 3rd and 4th years together.
One standard deviation is ninety-three points in a credit score (500 vs. 593 or 600 vs. 693).
The researchers argue that credit scores are related to more than money. According to the Federal Reserve findings, they are linked to an individual's trustworthiness and how they broadly honor their commitments. When couples differ on these critical variables, the problems go beyond paying higher interest on one's mortgage or car loan.
It isn't very sensible to propose that simply combining financial resources will promote togetherness without an examination of the trustworthiness of each individual.
When a couple is mismatched in how trustworthy and reliable they are, this impacts the stability of their relationship. If you handle these types of commitments similarly, money may cause less tension in your relationship.
Budget and pool
Planning finances together transparently, establishing a household budget, and retirement planning all make good sense. Those with higher credit can budget responsibly, set clear financial goals, and talk calmly about finances regularly.
Even bad credit can be corrected over time when two people can talk honestly and foster goodwill. This helps to build a long and lasting relationship.
However, if you can plan and budget and the other refuses, these are not matches made in heaven. They are forced to adopt separate finances, whether they prefer to or not. Chances are good that the partner that "buys today and worries about payment tomorrow" is less likely to manage their credit wisely.
In this case, deciding not to share loans or credit cards and maintaining separate and joint accounts may be wiser.
Couples like Tim and Carolyn need help aligning these variables, and doing more than tackling questions like "how much should we spend?" and "What does 'being generous' mean?" Dr. James Grubman argues that coming from economically diverse families can enrich a couple's relationship rather than spell trouble.
In Tim's case, he was first generation wealth, having started his own successful business. Carolyn was second generation wealth, and was taught to "never touch the principle." For Tim, "money was made round to go round..." and he valued growing a large pool of friends through his largess. For Carolyn, it was never safe to talk about or to discuss your family's wealth. She found these conversations with Tim extremely challenging. Tim took calculated risks, which made him successful in his business, but while he knew that "cash is king" in his business, he paid less attention to his personal finances. If he and Carolyn were going to have a long and happy marriage, they would have to do so consciously.
Simply pooling their money, without a lengthy and thoughtful conversation, as in an intensive Couples Therapy Retreat, would be a poor solution.
Do joint bank accounts mean enduring relationships?
The consensus of previous studies is that money-related matters consistently emerge as significant points of contention in many marriages. To suggest such an easy fix is ludicrous.
Individual factors such as impulse control, capacity for long-term planning, emotional regulation, and a similar credit score play a role.
All things being equal, couples with equivalent skills at managing (or mismanaging) money will be happier than those who are mismatched.
Sharing finances responsibly with your spouse will undoubtedly lead to a more collaborative attitude. However, contrary to this researcher's hypothesis, it isn't because of a "we" perspective. It is because they are well-suited financially.
In truth, your financial health is shaped by elements that reveal a broader narrative about your connection with money. This encompasses how effectively you can manage your financial responsibilities, how confident you are about your economic prospects, and ultimately, whether you possess the liberty to make financial decisions that enable you to enjoy your life. And what constitutes "the good life" varies by individual.
Those reading the headlines and jumping on the research bandwagon would be wise to look more deeply. Handling money in a marriage is complex and should be handled thoughtfully.
Jenny G Olson, Scott I Rick, Deborah A Small, Eli J Finkel, Common Cents: Bank Account Structure and Couples’ Relationship Dynamics, Journal of Consumer Research, 2023;, ucad020, https://doi.org/10.1093/jcr/ucad020