How Many People Have Joint Finances?
Traditionally, married couples and long-term partners combine their finances by opening joint bank accounts. But a growing number of Americans are choosing to keep their money separate.
This is especially true for millennials and Gen Xers. According to a survey, 35 percent of millennials and 26 percent of Gen Xers keep their finances completely separate from their partner.
1. Millennials
Traditionally, two people who met and fell in love got married and combined their money into a joint bank account. In a world of dual-income households and relationships formed years into one’s career, however, many couples choose to keep their finances at least partially separate.
While it’s true that this option can be a bit complicated, it may be worth the effort for some couples. It can also help them develop more financial literacy, which is critical if something were to happen to their partner or they started experiencing a major dip in their income.
To find out more about how millennials handle their finances, we surveyed 1,700 adults aged 18 to 34. We asked them about their savings habits and how much they were saving for different things.
Younger millennials were more likely to be saving for things like a home, a baby or a wedding. Those who were engaged or married were more likely to save for a baby, but the percentage was lower for those who were dating or not engaged.
The survey results showed that millennials aren’t just saving for things like house prices or weddings; they’re also saving for future expenses, including college tuition and healthcare. They’re also avoiding spending more than they can afford on things like vacations and electronics.
In addition, they’re focusing less on politics than past generations did. Moreover, they’re generally described as more open-minded and supportive of gay rights and equal rights for minorities. Nevertheless, they face serious challenges as a result of coming of age during the recession and having record levels of student debt. This is why it’s important for business owners to understand millennials’ financial tendencies and how to interact with them.
2. Gen X
The coming of age of Generation X in the 1980s was a time of great social and economic change. Gen X was the first generation to experience an economy that demanded postsecondary education for economic success, and it responded with higher educational attainment than any previous group.
They also learned independence and self-reliance early on, which helped them navigate the rocky economic times of the 1970s and ’80s. These values, coupled with their desire to make a better life for themselves and their families, set them apart from other generations.
However, these characteristics also made them more prone to debt than other generations and led to a lot of personal financial duress. It’s no surprise that Gen Xers are among the most likely to face credit card debt and other short-term financing issues, but these problems can be mitigated by making smart savings decisions.
In addition, they may have more confidence in their ability to achieve wealth goals than younger generations. The study found that Gen Z and millennial women are more confident than their baby boomer counterparts in their ability to afford retirement, even though they are less likely to have saved enough for an emergency.
This is largely due to their experience with a financial crisis that caused many young people to struggle with their money. It also may have something to do with how they were raised, which could lead them to feel that frivolous spending is wrong. Additionally, many Gen Xers are more accustomed to interacting with their financial institutions on mobile devices, which makes it easier for them to access their accounts. In addition, they are more likely to talk with a financial professional about their money than younger generations, and they are a bit more conservative when it comes to investing.
3. Gen Y
Compared to the other generations, Gen Y is less likely to have joint finances. Only 16% of millennials and 19% of Gen Z have shared credit cards, while baby boomers are the most likely to share loans at 46%.
Similarly, only 22% of millennials and 37% of Gen Z have shared joint bank accounts. And most millennials and Gen Z still keep separate bank accounts for personal expenses.
However, many millennials and Gen Z do have joint bank accounts for common expenses, like their mortgage, food and clothing. This isn’t uncommon for couples who live together, as it allows them to split expenses evenly if they don’t make enough money to cover all their bills on their own.
It’s also important for couples to set clear financial expectations early in their relationship. This can help them understand where their money is going and how they’ll handle any financial emergencies that may arise.
Another thing that a lot of Gen Y and Gen Z couples have in common is the importance of talking about debt with their partner. This can be a good thing, but it can also be a difficult conversation.
While some Gen Y and Gen Z couples have discussed debt with their partners, many others haven’t. This could be because they’ve grown up with a different understanding of how money works. It’s also possible that they haven’t had a prenuptial agreement, which is a legal document that states how assets and debts are handled if a couple divorces or dies.
Because of this, it’s important to be cautious with your teen daughter’s finances and to educate her about them as early as possible. If your teen daughter hasn’t learned how to manage her own money, you might want to consider finding a mentor or coach who can teach her how to do so.
4. Baby Boomers
The baby boomer generation grew up during a time of economic stability and prosperity. It was a period during which businesses flourished, wages increased, and schools were accessible to more people. This group benefited from GI Bill benefits to help fund their education and careers.
Today, many boomers are raising children or supporting aging parents and face financial challenges. A 2005 Pew Research Center survey found that half of all boomers were raising one or more young children and another 17% were providing primary financial support to at least one adult child.
Some boomers may feel that they are not doing enough to build their financial nest eggs for retirement. Some owe credit card debt or have low-paying jobs, and some have inherited family assets that are not large enough to cover all of their expenses.
As a result, they are anxious that their income will not keep up with the cost of living over the next year. A majority of baby boomers say that is likely, and three-in-ten expect they will have to cut household spending to make ends meet.
Moreover, they believe it is harder to get ahead than a decade ago. About two-thirds of boomers agree that it is harder to get ahead, a higher percentage than younger or older Americans say.
They are also less apt to say that their standard of living exceeds the one their parents had at the same age, which is another measure of their gloomy outlook. Almost four-in-ten (39%) baby boomers say their standard of living is worse or no better than their parents had, which is a higher proportion than younger adults (32%) or older adults (27%).
When it comes to their finances, members of the baby boomer generation have less patience than other generations. They are more likely to argue with their spouse or partner about money than millennials and Gen Z’ers.
5. Gen Z
While Gen X and baby boomers had to learn how to manage their finances on their own, younger generations are starting to take control of their financial futures. Whether they want to invest in stocks or save for retirement, it’s important for young people to understand their options and how to make smart decisions with their money.
As a result, many young adults feel equipped to tackle the basics of budgeting, managing day-to-day expenses and building credit. However, they struggle with more complex topics like investing and debt.
This is probably due to their childhood experiences during the recession of 2007-09. The economic downturn was especially difficult for young people who had seen their parents or older relatives face financial struggles.
In addition to being averse to debt, Generation Z is also very frugal and practical when it comes to saving and spending money. In fact, they often prefer to save their cash for things that they enjoy rather than things they think they need.
Their more pragmatic approach to consumption is also a major part of their economic philosophy, says Stanford scholar Roberta Katz. The generation is savvy and analytical, and they expect to have access to a variety of information before purchasing any products or services.
This can help them avoid making bad buying decisions or spending too much on items they may not need. It can also save them time and money, which is particularly important for young adults who are just starting to enter the workforce. It’s also important for them to learn about the various ways they can save money, such as retirement accounts and employer-sponsored savings programs. In addition, they should always have access to their parents’ bank account, so that they can talk with them about any financial issues they may have.
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