Sharing Bank Accounts May Be The Key To Long-Term Relationship Harmony, Finds New Research

Indiana University's Jenny Olson discusses three novel ways for newlyweds to strengthen relationship quality.

By Mark Travers, Ph.D. | June 16, 2023

A new study published in the Journal of Consumer Research examined the impact of merging finances on relationship quality for engaged or newlywed couples. The study suggests that couples who merged their finances experienced a buffering effect against the possible decline of relationship quality over time.

I recently spoke to Jenny Olson of Indiana University to understand how financial harmony, goal alignment, and sustaining a trust-based relationship serve as key mechanisms for this positive effect. Here is a summary of our conversation.

What motivated you to investigate the effects of merging money in a joint bank account? What were your main findings regarding the impact of merging finances on relationship quality for engaged and newlywed couples?

We were (partially) motivated by the conflicting advice that's often given to newlyweds. While some sources recommend merging ("when two become one"), others insist that partners maintain separate financial lives. So, what's a couple to do?

Another big motivation was the ambiguity around causality. Prior to our research, there were a few studies showing a positive correlation between merging and marital happiness.

Unfortunately, these studies couldn't speak to causality – it was possible that merging finances makes couples happy. It is also possible that happy couples are more likely to merge finances. Thus, an experiment (like ours) was necessary.

Through a longitudinal field experiment, we found that couples randomly assigned to maintain separate accounts and those randomly assigned to a no-intervention condition showed the normative decline in relationship quality over time (note: relationship quality generally declines over time, so we replicated prior research).

Importantly, we found that couples randomly assigned to merge their finances were buffered against decline. One reason for this buffering effect was that couples with joint accounts reported increasing financial harmony as they transitioned to marriage (e.g., lower conflict and greater satisfaction with how each other manages money).

Could you explain why merging bank accounts tends to benefit couples?

We find evidence supporting three potential mechanisms.

1. Joint (vs. separate) accounts improve financial harmony by prompting partners to consider how they might justify purchases to each other (e.g., that salon visit or night out with friends is now visible via online banking). Over time, this might reduce difficult-to-justify purchases (as well as potential arguments) and improve couples' financial well-being.
2. Opening and using a joint account forces partners to be more transparent about their spending. Once partners "get everything out in the open," they may better understand each other's priorities and align their financial goals.
3. Merging money in a joint account preserves the communal nature of the relationship. Rather than "your money" and "my money" (and the resulting scorekeeping), it's all "our money."

What challenges or obstacles might couples face when merging their finances, and how can they navigate these challenges to maintain a strong relationship?

One potential challenge is the perceived loss of autonomy – sometimes we don't want our partners seeing every expenditure. I would recommend having an open conversation with your partner about balancing the need for togetherness and autonomy.

Two potential approaches that may prove successful:

1. Couple joint accounts with separate credit cards
2. Set spending thresholds (i.e., an agreed upon amount of money that each partner can spend independently without seeking spousal input or approval).

What advice would you give to engaged or newlywed couples who are unsure about whether to merge their finances or keep them separate?

We acknowledge that merging finances is neither risk-free nor ideal for all couples (e.g., the potential loss of autonomy I mentioned previously). That said, our results offer the strongest evidence to date in favor of merging finances.

I recommend having an open conversation weighing the pros and cons of different account structures before making an informed decision. It might need to be an ongoing conversation as new needs and challenges arise.

Are there any specific communication strategies or financial practices that you would recommend for couples who have decided to merge their finances?

Ongoing conversations are a must; set aside a dedicated time for a "financial date night." Planned conversations are important as they give partners time to prepare and avoid feeling caught off guard.

After all, money can be a spicy topic.