Finances may begin to matter in romantic relationships long before marriage, according to new research.
“…if you’re a 24-year-old, choose your dating partner wisely.”
Researchers set out to see how financial socialization from three different sources affects life outcomes and well-being in young adults. The three sources they looked at were parents, romantic partners, and the young adults themselves.
The findings show that young adults’ own financial behaviors, unsurprisingly, had the most impact on their well-being. In second place were the financial behaviors of their romantic partners, while financial expectations of parents—who undoubtedly have the earliest financial influence on their lives—seemed to have the least impact.
“Financial socialization means how do individuals—in this case, young adults—learn about finances? How do they learn how to save, how to budget, how to responsibly borrow, basically anything about finances,” says Melissa Curran, lead author of the study, which appears in the Journal of Family and Economic Issues.
“The fact that young adults are perceiving that what their romantic partner does, financially, impacts them is really interesting, especially because most of them are not married and not cohabitating,” says Curran, associate professor in the University of Arizona’s John & Doris Norton School of Family and Consumer Sciences.
“They’re young in relationships, which really goes to say that even in these non-marital, non-cohabitating relationships, the person who you are with matters. Their finances matter for your relationship outcomes and well-being.”
Young people and money
The researchers’ findings are part of the ongoing APLUS Life Success research project, which began collecting data from first-year University of Arizona students in 2008 and continues to follow them into adulthood to explore how they achieve stability and happiness.
“In the United States, you do better when you do have some modicum of money…”
The new study is based on responses from the third wave of data collection from 504 participants, with an average age of 24, who self-identified as being in a committed romantic relationship. Most of those young adults—61.5 percent—were unmarried and not living with their partners. Thirty percent were unmarried but cohabitating, and 18.5 percent were living together and married.
While a number of factors contribute to young adults’ life outcomes and well-being, the APLUS researchers are especially interested in finances.
“In the United States, you do better when you do have some modicum of money,” says Curran, who is research director for the Norton School’s Take Charge America Institute. “You don’t need millions and millions of dollars, but having no money is very stressful. Having access to money to do things like pay your bills and have a savings account for emergency borrowing purposes makes your life a lot easier.”
Study participants were surveyed about their parents’ financial expectations of them, asked to rate on a five-point scale how much they agreed with statements like: “My parents think I should track my monthly expenses,” or, “My parents think that I should pay credit card balances in full each month.”
Participants also rated how often they themselves engage in a number of different financial activities, such as paying bills on time, contributing to a retirement account, or saving each month for the future. They also were asked how often they think their romantic partners engage in those behaviors.
In addition, participants responded to a series of questions designed to measure their life outcomes and well-being. The questions assessed participants’ perceptions of their own physical health, overall well-being, life satisfaction, romantic relationship satisfaction, and romantic relationship commitment, as well as their subjective and objective financial knowledge.
Subjective financial knowledge was measured through a question asking them to rate their understanding of personal finance and money management, while objective knowledge was measured through 15 true-or-false financial knowledge questions.
Researchers found that the individuals’ own financial behaviors were associated with all outcomes measured, except relationship satisfaction and commitment. Individuals’ perceptions of their romantic partners’ financial behaviors were associated with their relationship satisfaction and commitment, as well as their overall well-being and life satisfaction.
Financial socialization from parents had an impact on only one outcome: young adults’ performance on the objective financial knowledge questions.
Curran is quick to point out that this doesn’t mean parents’ efforts to educate their children about finances are unimportant. It just seems that, by age 24, young adults have transferred what they learned as children from their parents into their own behaviors, which are now having the greatest impact on their life outcomes.
“The good news for parents is we’re seeing a transmission of information, where young adults are launching,” Curran says. “Parents’ influence is now borne out in the young adults. That’s developmentally appropriate and good—it means parents did their financial job. We’re not seeing financial overparenting. We’re seeing young adults launching financially.”
The fact that young adults’ perceptions of romantic partners’ financial habits seem to have such an impact on young adults was somewhat surprising to the researchers. Partners’ emerging influence could be explained, in part, by the fact that young adults often are spending less time with their parents and more with their significant others, Curran says. This suggests that even young daters should consider their partner’s financial behaviors, in the interest of their own happiness.
“Your perceptions of how your partner is spending, saving, and responsibly borrowing has an impact,” Curran says. “So, if you’re a 24-year-old, choose your dating partner wisely.”