Should Spouses Pool Their Money?

Emily Garbinsky

Say you are ready to buy something frivolous. If there were a picture of your spouse on the credit card, would it stop you?

What if a text message from your spouse popped up on your phone before the transaction was complete? Would that make you hesitate?

It might make you want to toss the phone aside, but two researchers from academia say it also might help you save money.

Dr. Emily N. Garbinsky of the University of Notre Dame and Dr. Joe J. Gladstone of the University of Cambridge recently completed research on the psychology of spending and saving, titled “The Consumption Consequences of Couples Pooling Financial Resources.” The conclusions can be useful for financial advisors working with couples with money issues, Garbinsky says.

“We propose that the ease with which purchases can be justified to one’s partner will play a driving role when spending from a joint account rather than from a separate account,” says Garbinsky, an assistant professor in the Mendoza College of Business.

“We were not trying to make recommendations on whether couples should have joint accounts or separate accounts. Nor were we trying to tell advisors what they should tell clients,” Garbinsky says. “Rather, we were trying to show that whether they pool their money can have an effect on how they spend it.

“However, we have been getting so many questions about what we would recommend that I think we will look into that next,” she adds.

The paper received the BMO Wealth Management Best Paper Award in Consumer Finance from the CFP Board Center for Financial Planning. The Best Paper Awards were presented at the Academic Research Colloquium held in February.

Read the entire story on the FInancial Advisor website.