There’s an old saying: “When Money walks in the door, Love flies out the window.”
That may or may not always be true, but understanding the mindsets of Americans married or otherwise living together or at least in a romantic relationship is essential to being able to market financial services to them now and in the future.
Studies have been portraying American marriage and cohabitation increasingly in a less idealistic light. Less a union and meeting of the minds and more, sometimes, as an uneasy economic alliance. Communication about finances isn’t always what it could be, both before and after marriage.
New factors influence partners’ thinking about money. For example, a Merrill Edge survey on love and money found that many mass affluent Americans say social news feeds influence their spending habits (48%), budget (43%) and savings (42%).
More than half of American singles discuss their financial situation within the first three months of dating.
— Center for the New Middle Class
According to a study by TD Bank, one place where Americans tend to open up about money is in the world of online dating sites. In the study 16% of respondents said they met their partners on an online dating site and among these people, 27% said they discussed money with their online match before meeting them in person.
More generally, according to a study by CompareCards.com, part of LendingTree, almost one out of three Americans marry with no idea how much non-mortgage debt their fiancé owes. Even fewer have any inkling of where their intended’s credit score stands. On the other hand, one in ten say they put off proposing because of debts they or their love interest owed.
Emotions can run high when money is the subject. The TD Bank survey found that a third of married couples admit to arguing about money at least once a month. Unfortunate, but not quite as bad as in the case of since-divorced couples, where 44% reported at least monthly money rows.
So, before you pick your next batch of happy couple stock photos, some facts to ponder:
1. People Hide Accounts from Their Spouse or Partner
Nearly 20% of Americans are currently concealing a checking, savings, or credit card account from their spouse or partner, according to research by CreditCards.com.
“One in five consider ‘financial infidelity’ to be worse than marital adultery.”
On the other hand, more than half of those surveyed — 55% — consider hiding a banking relationship to be a serious betrayal, at least the equivalent of physically cheating. One in five of those surveyed actually consider “financial infidelity” to be worse than marital adultery.
The survey found that Millennials admit to hiding financial accounts from significant others almost twice as frequently as all others — 28% versus 15%.
Only 2% of those surveyed who are in a live-in relationship would terminate the relationship if they discovered their partner had been hiding $5,000 of undisclosed credit card debt. Eight in ten say they would be upset, but would not end things. And 16% of the sample said they wouldn’t care much or at all.
“A third of married couples admit to arguing about money at least once a month.”
CreditCards.com’s Ted Rossman, Industry Analyst, says couples need to overcome reluctance to discuss money. “You can still maintain some privacy over your finances, and even keep separate accounts,” says Rossman, “but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”
Interestingly, figures from other surveys indicate that “us” is a concept that doesn’t always translate into finances. A study for Ally Bank, for example, found that only two out of five couples share all income and expenses. The study found that one in five actually keep all income and expenses separate.
2. Money Trumps Romance
54% of men and 57% of women surveyed want a partner who will give them financial security rather than “head over heels” love, according to a survey of mass affluent Americans by Merrill Edge.
“59% of Gen Xers surveyed, and 56% of Baby Boomers prioritize a partner who will fund the life they want to live over someone who will never stop giving them butterflies.”
Only the youngest people surveyed, Gen Z, preferred love (54%) over money (47%).
By contrast, 59% of Gen Xers surveyed, and 56% of Baby Boomers “prioritize a partner who will fund the life they want to live over someone who will never stop giving them ‘butterflies’,” the company reported.
Merrill Edge indicates that this continues a trend seen before in its twice-a-year study. “Americans are saving money at record rates, and yet we’re seeing people of all ages look to their current and prospective partners to secure their financial futures,” says Aron Levine, Head of Consumer Banking at Merrill Edge. “Economic uncertainty and a lack of financial planning seem to be creating this burgeoning trend of dependence on others for financial security.”
One in three couples admit to experiencing financial stress very — or fairly — often.
— Center for the New Middle Class
Indeed, the TD Bank survey mentioned earlier indicates that financial stress causes one in five couples surveyed to delay buying a home. In addition, anxieties over retirement and the ability to pay off debt remain high.
Yet formal financial advice isn’t sought by many. The bank’s survey indicates that 55% of respondents have never met with a financial advisor with their partners. And only 30% of couples meet with a financial advisor annually.
3. Pre-Nuptial Debts Weigh on Married Couples
Generally there’s nothing in the wedding vows about honoring the debts one’s spouse is bringing into the marriage, but maybe there ought to be. According to research by Fidelity Investments more than half of the couples surveyed carried debt into their marriage and two out of five of those couples say that debt hurt their relationship.
Regarding such debts, nearly half of couples don’t agree on whose duty it is to pay them off . “Encouragingly, though, respondents are more likely to feel responsible for taking their other half’s debt (55%) rather than expecting their partner to pay off theirs (33%),” according to Fidelity.
The study found that often couples don’t communicate well about financial issues. The research takes the unusual step of separately gathering and then comparing the answers of both spouses. One out of seven respondents couldn’t accurately state their spouse’s employment status, and more than two in five spouses disagree on when they plan to retire.
4. Money Matters in Marriage Decisions
Why do couples living together decide — or not decide — to make it official?
“Marriage is increasingly reserved for couples that have achieved a high economic standard.”
A blog in the Cornell Chronicle drawing on research by Patrick Ishizuka, a postdoctoral fellow studying marriage issues, reports that “co-habitating couples are likely to get married only when they earn as much as their married peers. And when each partner in a co-habitating couple earns the same amount, they are less likely to separate.”
The blog points out that the study appears to support the “marriage bar” theory. This premise holds that the nearer a couple comes to an economic threshold status associated with marriage, such as having enough to buy a home, the more likely they are to wed.
For this reason, the theory holds, economically disadvantaged unmarried couples are less likely to wed. They haven’t come near the marriage “bar.”
This observation from Ishizuka: “Marriage is increasingly reserved for couples that have achieved a high economic standard. Rising divorce rates since the 1960s have also been steepest for individuals with less education.”
The social scientist says unmarried couples where each partner earns about the same money tend to stay together, versus those with unequal income.
Ishizuka theorizes that co-habitating couples “tend to have more egalitarian views on men’s and women’s roles than people who go from singlehood straight into marriage,” according to the blog.
5. Engagement Rings Come With Financial Regrets
How many couples have looked at the rock on one of their hands and mused on what it could have paid for today?
About half of Americans with debt today told pollsters for CompareCards.com that they would have been happy giving or getting a less-expensive engagement ring in order to have the cash today to pay off current debt.
Brides.com reports that the average price of an American engagement ring in 2018 was $7,829, up 55% from 2017’s $5,023. As a point of reference, in 2018 Nerdwallet estimated the average American household’s revolving debt at $6,929.
CompareCards.com’s research indicates two out of three currently married American couples paid off their engagement ring immediately. Cash from checking or savings paid for the rings 62% of the time. Most of the rest were handled with credit cards (27%).
“It’s clear that for millions of Americans, when it comes to engagements, the ring is no longer a priority,” the site states. “Many would be just as happy paying off their debts as they would be showing off their new bling.”