The key to a happy marriage is a joint bank account. You heard it here first.
The way a couple structures their bank accounts influences the quality of their relationship, according to a study of those engaged and newly-wed published in the Journal of Consumer Research this year.
A joint bank account helps couples align their financial goals and norms, rather than behave in a more transactional way, according to Common Cents: Bank Account Structure and Couples’ Relationship Dynamics.
In short, if all money is everyone’s money, then partners don’t end up keeping score.
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The opposite-sex couples assigned in the experiment to have completely separate bank accounts and those left to their own devices showed significant declines in relationship quality over time. (Of the couples in this no-intervention group, 72 per cent kept separate accounts).
Couples who merged all their money into a joint account, however, maintained the quality of their relationship and also showed greater financial harmony.
Merging finances improves how partners feel about how they handle money, promotes financial goal alignment, and means partners are better at responding to each other’s needs without expectations of reciprocity, according to the study.
Those engaged and newly wed were studied because couple dynamics in those early stages predict how their relationship will progress thereafter, says study researcher and Kellogg School professor, Eli Finkel.
Financial interdependence helps newly-weds preserve stronger relationship quality throughout the newly-wed period and potentially beyond.
Money, money, money
Joint bank accounts are fairly common, according to the Common Cents study. A slight majority of male – female couples in western nations report using only joint bank accounts (52-65 per cent). Still, 10-15 per cent report maintaining completely separate accounts, while the rest use a combination of joint and separate accounts.
Women’s contributions to total couple income were more predictive of separate bank accounts than men’s, according to a separate Australian study published in 2019.
Indeed, how couples manage their money shines a light on independence and equality in intimate relationships, according to To Pool or not to Pool, which looked at the financial arrangements of Australian couples.
Their arrangements can tell a lot about how they reconcile having equality in their partnership with enduring gender inequality in society and the labour market.
Can’t buy me love
If you want to get under the bonnet of couples’ finances, ask a divorce lawyer.
“If a couple is in their 30s and they were financially independent before they met, they tend to maintain their own current accounts into which their salaries are paid,” says Avril Mangan, of Mangan & Company Solicitors.
“Then they’ll have a joint current account they both put an agreed amount of money into every month to fund the house, the mortgage and the creche,” she says.
The important thing for new couples is to be intentional about how they do things. Have the conversation.
“They can put so much planning into their wedding or buying a house, but they actually don’t ever plan how they are going to manage their money on a day-to-day basis,” says Mangan.
“It’s amazing the number of people who don’t have the conversation about having children either, whether they want them or they don’t want them, and what they are going to do with them if they have them.”
Average creche fees stand at €1,800 a month for two children in Dún Laoghaire-Rathdown council area.
Couples who haven’t discussed how to fund this, or the financial impact and loss of financial independence if one of them stays home are in for a financial reality check.
The more children they have, the more likely a couple is to have a joint bank account and less likely to have separate accounts, according to the Australian research. This is evidence of couples opting to minimise negotiations and disputes over paying for joint bills.
Financial transparency
When you first shack up, you’re likely to have multiple bank accounts between you. There’s your current account, your savings account, a car loan, and maybe some money granny left. Then there’s their current account, their savings account, a student loan and a smattering of Revolut, Bunq and credit card accounts and subscriptions between you.
Financial transparency before a couple moves in together will save heartache, according to the Money Advice and Budget Service.
When you move in, it makes sense to cull two Netflix subscriptions, and to do the big shop together, but who pays at the till?
Conflict around financial planning and spending is one of the biggest causes of relationship problems, according to marriage counselling service, Accord.
“Many find that if both are employed, then two current accounts are better than one. That way you have a pool of money for individual use,” says Accord.
A certain amount of mystique can be healthy. Will your relationship benefit from knowing how much each of you spends on hairdressing or watching premium football games?
“It can be harder for people when they are used to their own financial independence to put all the money into one pot and not sort of feel, hang on a second, he’s had six golf trips this year and I’ve had one weekend away. Or she’s getting her hair done every week and I’ve only had one pint with the lads,” says Mangan.
“A bit of financial autonomy when both people are working is helpful.”
If you do go down the road of a joint account, finding out how to keep a track of and manage this single balance is of utmost importance as well as deciding who will take responsibility for that task, says Accord.
Save all your kisses for me
Couples can have all too informal agreements when it comes to their savings. Perhaps one person’s earnings covers the bulk of the bills while a portion of the other’s earnings goes into a savings pot.
Would you be comfortable if this savings account was in their name only and you had no visibility?
“If we have a joint savings account with €100,000 in it and each of us can sign individually for it, then one of us can go and clear out the account. That is something to consider if there is a lack of trust in the relationship,” says Mangan.
“I’ve seen it happen in cases where the money is moved out into a sole account, ‘to repay that loan from my mother’.”
When setting up joint accounts, partners should decide if they will both be allowed to access the account without needing permission from each other.
Prenups
You might think prenups are for the mega wealthy, but for mature couples in particular, they can provide comfort, says Mangan.
“It can be a couple who are PAYE earners, so not mega money. They are comfortable, but they are older, they have both built up assets in their own name, they both have good jobs, they have pensions and they come looking for a prenup because they want to manage expectations.”
While prenups aren’t yet legally binding in Ireland, they can be of persuasive value and the courts may take account of them, Mangan says. “They are important because they manage people’s expectations from the beginning.”
“You are better off having the discussion now. You might have a row about it, but it’s better that you have that row now. You might save an awful lot of stress if the relationship breaks down.”
Protection
In some relationships, a stay-at-home spouse may not have had access to a joint bank account, but is given money or the use of a debit or credit card.
“More commonly in those arrangements, that money given is for the family in the main – it’s your money for the week to buy groceries, if the kids need €20, if they need runners, or if you want to get your hair done,” says Mangan.
In the event of relationship breakdown, family law seeks to protect those who are financially reliant on a partner.
“Financially dependent spouses can be told they are going to be left without the shirt on their back,” says Mangan.
If the financially dominant partner tried to deny they were supporting you, they will be required to provide bank statements going back 12 months. If statements show you were receiving €500 a week for example, that’s not all that’s taken into account.
“If the financially dominant person was paying the mortgage, the electricity, the school fees and all other direct debits, the amount the financially dependent person has the benefit of far exceeds €2,000 a month,” says Mangan.
When a couple splits to form two households, however, both households have to be funded. “If the pot doesn’t extend to it, the judge can’t make orders saying the stay-at-home partner is going to have the benefit of €7,500 a month because that’s what they always had. That’s when there was only one mortgage and one set of leccy bills. When you are splitting things in two, everyone will some feel pain.”
Financial abuse
If your partner or ex-partner controls the finances and prevents you from working or having your own money, this is coercive control and it’s a criminal offence. Other examples include if they keep you financially dependent on them, deny access to the family finances to pay for food, bills and medication, if they deny access to joint bank accounts and financial information, if they pressure you to give them money or get you into debt, if they tell you how often you can work or demand you handover earnings, or if they refuse to pay child maintenance.
If you ever decide to seek protection from the Garda, it will help to have kept bank records or copies of emails, or text messages, says Women’s Aid.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
