The Reasoning Behind Maintaining Separate Finances in Relationships

Obviously, a primary component in committed, romantic relationships, regardless of the participants’ genders, is sharing. Sharing emotions, moments, goals and yes, finances.

Regarding the sharing of finances, it appears to be theoretical for many couples. That might explain why rates of financial infidelity are so high. Don’t scoff at the notion of financial infidelity because some research confirms the jilted partner often views financial transgressions as comparable to romantic infidelity.

Indeed, financial infidelity is a form of keeping secrets and it is the latter act that often begets the former. Financial infidelity offenders often get there due to their internal desire for control, privacy or both. To some extent, it’s understandable. Someone that has been single for awhile hasn’t been beholden to another person for anything, let alone financial accountability.

However, in the confines of a relationship, keeping secrets isn’t productive and is often detrimental. Fortunately, there are avenues for advisors to tap into in an effort to help clients avoid clandestine financial matters.

Compromise Is Essential

Compromise is crucial in relationships and that wisdom is applicable to finances. As noted above, some offenders of financial infidelity may fall into the “control freak” camp. So getting someone like to immediately change their ways is likely difficult, but compromise can bridge gap.

A new Bankrate survey highlights the concept of “yours, mine and ours” budgets. In a hypothetical example in a female/male marriage, the wife and husband have incomes of their owns and perhaps separate accounts. To get to “ours” there needs to be a joint account and some stipulations on how those funds are allocated.

“The key is to agree upon the specific parameters ahead of time. For instance, you might designate a certain sum, such as $100 per pay period, for individual spending outside of your shared account. Or maybe it’s a percentage. Whatever you decide, it’s crucial to be on the same page. When one person squirrels money away without the other’s knowledge, that’s financial infidelity,” according to Bankrate.

The idea of the shared account isn’t as much about keeping tabs on the partner as it is fostering transparency and openness that could potentially foster growth in the relationship.

Age Matters

Not surprisingly, the older couples are, the more likely they are to have joint financial accounts. Baby boomers lead the way in terms of having fully combined financial accounts while Gen X is tops in terms of deploying “yours, mine and ours” tactics. From there, things get murky.

Bankrate notes that a third of millennials completely combine finances in committed relationships, but a comparable percentage are keeping finances totally separate.

“Gen Zers (ages 18 to 27), by contrast, are the most likely to keep their money completely separate from their spouse or partner (38 percent). Some 34 percent of Gen Zers in live-in romantic relationships fully combine their finances, while 28 percent have a mix of joint and separate accounts,” observes Bankrate.

Advisors should note the two paragraphs above because the data indicate the younger someone is, the more likely they are to commit financial infidelity.

Related: Why Advisors Shouldn't Miss Out on Evaluating Bitcoin