Can banking with a partner make you a smarter spender?



Myles Ma

Myles Ma

Senior Managing Editor

Myles Ma is a health care expert & personal finance writer for Policygenius. He edits the Easy Money newsletter.

Published January 30, 2019|2 min read

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It's a common assertion that couples who bank together tend to spend more responsibly.

Now, it's backed by science.

A recent study in the Journal of Consumer Psychology says using a joint account gives people a greater need to justify purchases — meaning couples who have one spend smarter.

Why joint accounts lead to smarter spending

The study measured how couples divided their spending between "hedonic" purchases — like eating out, alcohol and vacations — and "utilitarian" purchases — like gas, insurance and electricity. People who pooled their money with a partner tended to spend more on utilitarian purchases because they felt like someone was watching, explained Emily Garbinsky, assistant professor of marketing at the University of Notre Dame and one of the authors of the study.

Not all couples have a joint account together. In fact, a recent Policygenius survey found that one in five couples kept their money completely separate.

Money is one of the big reasons couples fight, Garbinsky said. One way to avoid fights over spending is by discussing purchases. Pooling money compels couples to do that.

"It forces couples to have these conversations about money they might not ordinarily have," Garbinsky said.

Making responsible spending choices can add up to a lot of savings (and a healthier relationship) over time.

"If you're making these decisions over and over again it can have a cumulative effect," Garbinsky said.

How joint accounts work

Though joint accounts are more common between romantic partners, you can start a joint account with just about anyone, said Darin Shebesta, certified financial planner with Jackson/Roskelley Wealth Advisors.

Just make sure to open a joint account with someone you trust. If the other person on the account falls into debt or goes bankrupt, creditors may pursue the money in the joint account, Shebesta said.

Jenny Olson, an assistant professor of marketing at Indiana University, said that while a joint account fosters communication between partners, it won't necessarily prevent financial infidelity, which is when one owner of the account withholds financial information from the other. Couples can still hold separate accounts or find other ways to avoid justifying their spending.

How single people can spend more responsibly

Not everyone has a partner to watch their spending. Single people have to hold themselves accountable. Instead of a partner, they can use budgeting apps to make sure they spend responsibly, Olson said. A budget is a kind of pre-commitment; it's a way of deciding today not to make bad choices later. Don't know where to start? Try this easy budgeting spreadsheet.

A single person can also recruit an "accountability buddy." They can help each other decide to stay in and order pizza rather than splurging on dinner out if it doesn't fit the budget, Olson said. You can also hire a financial adviser to track your spending.

How do you manage money with your partner? Tell us in the comments.

Image: PeopleImages