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Most relationships have a honeymoon phase. How long it lasts is often up to the participants, but real life does set in and can remove some of the blush from the rose.
One way to extend the honeymoon phase or, at the very least, avoid unnecessary spats is to be proactive in discussing finances before walking down the aisle. That’s logical advice because far too many marriages end in divorce with financial issues being among the main reasons.
An important place to start is with the issue of just how much of the spouses’ previously separate accounts should remain separated. This is a potentially thorny issue because, presumably, both people on the relationship were single for some time, thus implying a level of independence and accountability to no one other than themselves.
Shedding independence and letting someone else into our financial lives isn’t easy. It’s something a lot of people understandably struggle with. However, it’s also one of those issues that when nurtured for the better from the start, it can manifest in negative fashion, leading to undesirable outcomes.
Blended Might Be Better
In many instance, both members of the couple enter the relationship with multiple financial accounts – checking, savings, credit cards, auto loans, investing and retirement accounts. Not all of those need to be combined. Some shouldn’t be because there could be tax consequences, but when it comes to the accounts from which everyday expenses are tended to, combination could be fruitful.
In a recent interview with Morningstar, Scott Rick, author and associate professor of marketing at the University of Michigan’s Ross School of Business, highlighted findings from an experiment he and his team conducted with engaged couples and newlyweds about blending or maintain separate acconts. Those findings are indeed compelling.
“What we found was that the couples we prompted to open and use a joint account, they maintained their newlywed level of relationship satisfaction,” Rick said. “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.”
Hopefully, there was more to those happy couples’ happiness than just sharing a checking account and it’s likely that the not-as-happy couples have other issues, but the point is, a blended account can be a contributor to bolstering matrimonial bliss.
“So, we think the joint account was doing several things,” Rick told Morningstar. “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.”
Separate Accounts Still Have Utility
Having a blended account doesn’t mean the death of separate accounts. In fact, the latter’s credibility can be enhanced by the former.
Think of it this way. If both members of the couple are “playing ball” with the joint account, both deserve occasional indulgences, be it golf, a spa day – things of that nature.
“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,” concludes Rick.
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