Kupiku | E+ | Getty Images
How couples handle money differs from generation to generation.
Gen Z adults, or people between the ages of 18 and 27, are the most likely to keep their finances completely separate from their significant other at 38%. In contrast, baby boomers, adults ages 60 to 78, are the most likely generation to fully combine household finances with a spouse or partner, at 44%.
Bankrate surveyed 2,233 U.S. adults in December, 1,124 of whom were married or living with a partner at the time of the survey.
Personal Finance Details:
Money discussions should happen before the relationship gets serious.
3 financial tips for cohabiting couples
Many young unmarried couples do not divide expenses equally
“What comes up is the fear that if we consolidate our finances, we're going to lose autonomy,” said Lindsey Brian Podvin, a behavioral finance specialist and financial therapist at Bread Financial.
According to a recent study by a financial services company, almost half of people in relationships, or 46%, keep their money separate to avoid losing their financial independence. The survey was conducted in early January among 1,659 U.S. adults.
“We don't want our partners to become pseudo-parents,” Brian Podvin said. “When we lose our economic independence, all of a sudden we have a dynamic of checks and balances on equality.”
According to a study by Bankrate, 36% of cohabiting couples with household incomes of less than $50,000 a year keep their finances separate.
“Low-income households are often young adults,” said Ted Rothman, senior industry analyst at Bankrate. “The intersection of youth and low-income populations may help explain some of the chasm.”
“Low-income households may be more likely to remain financially independent for a variety of reasons,” says Brian Podvin. He said they are likely to have some concerns about financial institutions and operate outside the traditional banking system.
Brian Podvin said there can be a level of shame that young people have about the amount of student loan and credit card debt they carry. By keeping your finances separate, you may be able to keep your financial challenges private.
Gen Z also grew up with a cell phone in their hands and instant access to apps and technology, something that previous generations lacked, Brian Podvin said.
So you may not realize the need for joint finances, especially when you can easily pay joint expenses through apps like Venmo or Zelle.
“It's much easier to send and request money through a host of different apps,” says Brian Podvin. “It's part of the interaction they have with technology and how that part becomes a little bit more normalized.”
But not all Gen Z couples keep their household finances separate. Approximately 34% of Gen Z couples who live together fully combine their finances, while 28% combine “yours, mine, and ours,” Bankrate said. This was discovered through an investigation.
While financial independence is a priority for some couples, there are some benefits to joining forces.
About 38% of cohabiting couples have a mix of joint and separate accounts, while 24% keep their household finances completely separate, Bankrate found.
Experts suggest couples should consider weighing the financial situation of “yours, mine, and ours.” Because that way, couples get the best of both worlds. Individual accounts offer a degree of financial independence within a relationship, alongside joint accounts with common obligations.
“You, me, and our concerns could alleviate many of those concerns,” Rothman said. “As long as you agree to a framework, this can be a healthy way to manage your money.”
Money can be a major source of arguments between couples, and even includes “financial infidelity,” or the habit of keeping certain purchases or financial realities secret.
Almost half of couples, or 48%, admit to secretly making financial decisions without consulting their partner, according to a study by Bread Financial.
About 16% of couple respondents hid purchases from their partner, and 22% admitted to holding credit card balances. Furthermore, according to Bread Financial, 12% of male respondents hid their cryptocurrency ownership from their partners, compared to just 4% of female respondents.
But couples who value the idea of financial independence need to have open and honest conversations about money, says Brian Podvin.
If you and your partner decide to combine finances to share responsibilities, discuss how much each person should contribute to the shared account. She says these conversations can also help you agree on allowing each other some degree of financial autonomy.
