Association for Public Policy Analysis & Management

Declines in marriage and other demographic changes have altered patterns of legal ownership and management of financial assets within families. These changes to household financial arrangements have implications for the financial well-being of adult and child household members – during relationships and in the event of relationship dissolution.

We use data from the Survey of Consumer Finances from 1992 – 2016 to answer several questions: To what extent do different sex couples keep their financial assets separate and how has this changed over time? How do financial arrangements reflect marital status, education, race, income, and employment status? What is the effect of child-rearing on financial arrangements? Our project will highlight long run trends in financial arrangements and assess the implications for policy and economic well-being.

We have compiled eight releases of the Survey of Consumer Finances (SCF) spanning 1992 to 2016, with data on income, assets, and debt along with demographic and employment information. We use a sample of different-sex couples aged 22 and 65 to capture intrahousehold financial arrangements for working age families. For many of the financial assets, including bank accounts (the most common financial asset), SCF respondents are asked who is named on the accounts—the respondent, the respondent’s partner, or both (jointly held). We use this information to create aggregate measures of how much money is held jointly and separately by male and female partners.

The degree to which couples share legal ownership and daily management of financial assets impacts family members’ access to money during relationships and following dissolution. As relationships become less stable and involve fewer legal protections afforded by marriage, the financial security of vulnerable subgroups, including children, has become more precarious. While separate financial accounts may offer a degree of financial autonomy, and in some cases reflect a generational shift in preferences and gender roles, separate finances may also be a route to greater inequality between men and women (Pahl 2005). On average, women earn less than men, spend more time out of the labor force performing childcare, and are more likely to take primary responsibility for child-related expenses (Lundberg, Pollak, & Wales 1996, Kenney 2008). Each of these conditions results in diminished access to income to support children and build a stable financial future.

In initial results, we find evidence of increasingly independent financial arrangements among couples in the United States after controlling for demographic and relationship factors. We also find that once other demographic and relationship-specific factors are controlled for, cohabitating and married couples differ greatly in their legal, formal ownership of liquid assets. We find that children in the household increase the likelihood that couples join finances, but child support payments or receipt lower the likelihood of joint finances. The divergence between married and cohabitating couples’ financial arrangements may have important implications for the well-being of individuals across social-class and racial lines. Furthermore, as “blended families” have become more prevalent, the influence of financial management practices on payments for children and childcare is an important area of research.