On Monday, we discussed how people are sometimes dumb with money and love, but it’s not all bad news. Today, we highlight research that shows love can positively influence our finances. The first study, published in December 2015, followed 693 University of Arizona students. The (mostly white, female) students were extensively surveyed toward the beginning of college (ages 18-21) and then again toward the end (ages 21-24). The 693 study participants were all included because they reported being in a serious, committed relationship at the second survey. The study was trying to figure out the impact parents and romantic partners have on the financial behaviors and attitudes of college students.
Students were asked to indicate to what extent their parents did things such as track their monthly expenses, spend within a budget, pay credit card balances in full each month, save money monthly, etc. The students then had to rank their own attitudes towards each of the activities and then how often they had done similar financial activities (ie: save for retirement, pay bills on time, etc) themselves in the past six months. At the second survey time, students were asked to also answer the same questions they answered about their parents’ financial behaviors about their significant others.
RESULTS: During the first survey period, when college students were young, fresh out of their homes, and romantically unattached (only 2% reported being in a serious, committed relationship during the first survey), the positive financial behaviors of parents had a significant impact on the financial behaviors of the student (though not their financial attitudes). “Parents’ responsible financial behavior has a positive, direct effect on college students’ financial behavior, even when controlling for both parents’ and the student’s baseline behavior.”
During the second survey period, though there was still a correlation between positive financial behaviors of parents and positive financial behaviors of the student, the impact was no longer significant. Enter: the love interest! Here’s where I think it gets interesting. The influence moved from parents to romantic partner with financial behaviors of the partner having the same positive, direct effect on the student’s financial behavior, but the love interest was able to significantly impact the financial attitudes of the student as well. “In other words, the college students in our sample adopted the financial attitude and behavior of a romantic partner, presumably in response to observing and discussing that attitude and behavior with the romantic partner.”
These influences don’t go away as the marriage progresses. A 2014 PhD Dissertation out of Purdue looked at how spousal relationship qualities contributed to retirement savings. Conclusion: “Relationship strain was found to undermine IRA ownership while spousal support was associated with higher IRA balances.”
Your relationships have a large impact on your financial behavior and attitudes. We would be wise to answer the same questions about the people with whom we spend the most time: To what extent do these people contribute to savings accounts, spend less than they earn, pay credit card balances in full each month, track expenses, or pay bills on time? What is their attitude towards those same behaviors? What is yours?