When a couple decides to combine their income and assets, they consider family values, gender attitudes, and individualist or collectivist orientation. Examining partners' patterns of money management provides important insight into romantic unions. To the extent that couples keep any of their income separate, household members do not necessarily share one standard of living. As a result, conventional measures of economic hardship based on the ratio of income to the number of household members may be misleading. Therefore, investigating how couples manage money may reveal hidden inequalities within families.
Who keeps separate purses?
Combining households does not necessarily imply pooling income. In the United States, 80% of co-residential couples (married and cohabiting) maintain a single purse, pooling all of their income (Hamplova and Le Bourdais 2009). Of the remaining 20%, about half pool some of their money and half keep all of their money separate. Couple attributes strongly influence money management strategies. In general, married couples are more likely to pool their income than are cohabiters; parents are more likely to income-pool than non-parents; and male-breadwinner/female-homemaker couples are more likely to income-pool than dual-earner couples (Hamplova and Le Bourdais 2009; Treas 1993; Vogler, Brockmann, and Wiggins 2006). Values matter, too: Couples who practice individualizedmarriage, fostering independence rather than collectivism, are more likely to keep money separate (Lauer and Yodanis 2011).
Separate is equal?
Financial equality in intimate relationships can be alternatively conceptualized as “equal inputs” or as “equal outputs” (Hamplova and Le Bourdais 2009; Vogler, Clare, and Wiggins 2008). Particularly when couples adopt a breadwinner-home-maker model, pooling income validates the contribution of both partners and equalizes economic outputs because each spouse can access the same money equally. In contrast, a standard of equal inputs distributes the bread-winning burden equally and emphasizes both partners’ financial autonomy.
In this sense, assuming a standard of equal inputs can be seen as rejecting a gendered division of labor within romantic relationships and embracing women’s economic independence. But unless equal financial inputs are matched by equal contributions to unpaid labor, partners’ total contributions to joint goods remain unequal.
Moreover, as long as marriage and childbearing boost men’s income and lower women’s income (Ahituv and Lerman 2007; Brynin and Schupp 2000; Budig and England 2001; Budig and Hodges 2010; Cohen 2002; Miller 2011; Waldfogel 1998), maintaining separate purses (even if done with progressive, feminist intentions) exacerbates the already-substantial gender gap in economic wellbeing. This is furthered by the unequal housework burden—women still perform a disproportionate share of household labor—and time devoted to unpaid work lowers earned income (Bryan and Sevilla-Sanz 2011).
For these reasons, gender inequality in intimate relationships increases the gender gap in earnings. Under an “equal inputs” system, the cost of a woman’s relationship wage penalty—for doing the majority of housework and care work, and simply from being married and perhaps a mother—is not evenly distributed within the couple. Nor is the man's relationship wage bonus—rather, she simply has less spending money while he has more. Finally, in independent or partially-pooled systems, women may more often spend their personal money on joint goods (household items, children), further exacerbating the gender gap in access to discretionary spending for personal items (see discussion in Vogler 2006).
Who controls the joint purse strings?
Keeping separate purses may be problematic, but maintaining a single pool may conceal rather than eliminate within-household economic inequality. Whether money is pooled fully, partially, or not at all, men tend to have greater control over how it is spent (Vogler, Clare, and Wiggins 2008). Moreover, even when income is fully pooled, the source of the money can give it meaning, earmarking it for certain types of expenditures or granting one partner greater discretion over its use. Whichever spouse earns more is able to spend more and control major purchases and financial decisions (Lise and Seitz 2011; Vogler, Clare, and Wiggins 2008). However, making one-sided, autonomous decisions may cause or reflect problems in the relationship. When either partner (regardless of gender) makes autonomous decisions about spending, both partners may be less satisfied with their family lives, and even with their lives in general, as compared to couples who make joint decisions. Perhaps financial autonomy or disproportionate control conflicts with norms about family cohesiveness and cooperation; alternatively, less satisfied couples may be more prone to one-sided financial decisions.
Accounting has consequences
The ways that couples manage money have consequences: When couples maintain separate purses or have unequal access to a purportedly-joint account, inequality within families is obscured by standard measures of poverty and economic well-being. If partners differ in their spending priorities, or their altruism, one spouse may spend her or his “personal” pool of money on joint goods (including children’s expenses), potentially furthering differences in available money for personal spending.
Additionally, children and family come at a greater career and income cost for mothers than for fathers. Couples who do not fully pool income do not share this cost, leaving women with less personal spending money. Finally, when couples do not make financial decisions jointly, both partners report greater dissatisfaction with family life, compared to partners who decide together.
Ultimately, the “best” way to manage money depends on individual couple circumstances and also on partners' philosophical perspectives about fairness. Although material circumstances—children, gender specialization, marital status—influence money-management strategies, couples’ normative values about work, family, gender, and individualism may be equally important. Philosophical beliefs about equality, family, and fairness are at least in part subjective: There may be no one “best” way to manage money.