THE BENEFITS OF JOINT AND SEPARATE FINANCIAL MANAGEMENT OF COUPLES

Financial management differs across households and this has various consequences for the financial outcomes and well-being of partners in households. A study has been performed on the financial management of couples, in households with or without children, in which data from both partners was collected on having joint and separate bank accounts, syncratic (joint) and autonomic (separate) financial management, the drivers of financial management, and the occurrence of financial problems. Based on the data, four financial management styles were distinguished: syncratic/joint, male-dominant, female-dominant, and autonomic financial management styles. In the syncratic financial management style, partners have a joint bank account and take most financial decisions together. In the male/female-dominant decision styles, one partner (either husband or wife) takes the main decisions about how to spend from the joint bank account. In the autonomic money-management style, both partners have their own bank accounts, and can make their own decisions. As a conclusion, we find that both syncratic money management and having a joint instead of separate bank accounts correlate with fewer financial problems compared to male-dominant money management and having separate bank accounts. Working together as partners of a couple is beneficial for financial management and for avoiding financial problems.

In this study, we describe household financial decision making and financial management models from different disciplines, and empirically investigate the joint versus separate financial management styles of couples, their drivers, and their outcomes in terms of the occurrence of financial problems.
Due to, among others, technological progress, leading to an increasingly complex consumer environment and high speed of change, more knowledge and capabilities are required from partners in households in order to make optimal choices (Jappelli, 2010). Currently, the knowledge gap is increasing, especially in the consumer financial area (Willis, 2008). According to Braunstein and Welch (2002)

Microeconomic models
In microeconomics, different models have been used to capture household decision making: unitary models, bargaining models, and collective models (Himmelweit et al., 2013;Antonides and Van Klaveren, 2018). Unitary models assume only one single household utility function, without specifying individual preferences, and assuming that the provision of goods and time is based only on the pooled household members' incomes.
Income pooling is, for instance, more common for households with married partners, partners with more-or-less equal income, and households with children. Income pooling also assumes that it does not matter which expenses are paid from the husband's income or from the wife's income.
In the collective model of household decision making, the weighted sum of individual utility functions is maximized. In this case, the weight given to each individual utility function is based on the bargaining power of the partners in the household (Chiappori, 1988(Chiappori, , 1992Apps & Rees, 1997) such that higher bargaining power may result in higher utility. Bargaining and collective models of household decision making do not assume income pooling, as in the unitary model.
Yet, even in those models, income pooling may be applied in order to lower transaction costs (Treas, 1993 (Himmelweit et al., 2013). Even with income pooling, inequality in decision power may exist, for example, because non-earning women may feel uncomfortable spending money they did not earn themselves (Kenney, 2006). Microeconomic models usually do not describe the processes of decision making, which is the domain of psychology, sociology, and marketing, to be discussed next.

Psychological, sociological, and marketing models of household decision making
In most cultures, gender inequality in household work, income, and power exists. Women generally do more household work than men, and tend to decrease their household work as their earnings increase. However, even if spouses contribute equally to the household income, women still do more household work than men (Bittman et al., 2003;Hook, 2010 Greater equality of income and education between partners is generally related to more joint decision making on spending and saving. Another issue in intra-household dynamics is the power of partners and its impact on negotiation, bargaining and exchange processes. Power depends on (1)  does not only concern competitive, but also cooperative aspects of interaction and equity between partners. Note that negotiation is not a "one-shot" bargaining but an ongoing process in households over an extended period of time (Scanzoni & Polonko, 1980)  The only exception appears to be spending decisions on everyday goods and services, that are often made individually. In marketing, the emphasis is usually on individual decision making and choice, overlooking the fact that most major financial decisions of couples are made together.

Types of money management
Ferber and Lee (1974) coined the concept of the "family financial officer" (FFO). The FFO is the partner, often the husband, who takes the major financial decisions concerning, for example, the mortgage, tax declaration, and the purchase of expensive household items, such as the car and living room furniture. The FFO is either a reminiscent of the husband as the head of the household, or is the person with a better financial knowledge and capability than his/her partner. Pahl (1995) and Vogler (2005)  In this section, we describe the procedure of sampling from a household panel, and the way respondents were invited to participate in the study, and to fill out the questionnaire. The sample included both married and cohabiting partners, as advised in Heimdal and Houseknecht (2003) and Lyngstad et al. (2011), both couples with partners of different gender and couples with partners of the same gender, and couples with and without children. The Netherlands in January 2017.

Questionnaire
The questionnaire comprised three blocks of

Method
The third block consisted of questions on financial outcomes, including monthly savings and total debts (euros). Furthermore, this block included questions on having an overview of expenses including those made by one's partner, on difficulty of making ends meet, on comparing prices before making an important purchase, and on the last time a financial problem had occurred.
These financial problems included: not paying a personal bill in time, not paying a household bill in time, not having enough money on the joint account, not having enough money on the personal account, and not paying off loans/credit.

Analyses
The first block of variables served as background factors explaining the household decision-making and money-management styles. The variables of the third block are mainly dependent variables to be explained by the independent variables of the first and second block.
Although income was asked in brackets, we computed mathematical expectations of the income brackets assuming a lognormal distribution of income over the brackets, separately for the two partners in the household (Aitchison & Brown, 1960;Antonides, 1990, pp. 160-162). Saving and credit information was reported in brackets, and we converted this data into point estimates by using the bracket midpoints (and 1.5 times the highest bracket value if the amount exceeded that value).
In  Davis and Rigaux (1974), Pahl (1995), and Vogler (2005), although we obtained a higher proportion of the syncratic money-management style.   (Smeenk, 1998). Total monthly net household income was almost € 3,000 on average. Half of partners 1 had a medium level of professional education, whereas 45% had completed a higher education.

Determinants of household financial management
In Table 4 In Table 5 Saying this in another way, the probability of a joint bank account was larger, if partners were married, their family was small, income was pooled, and/or financial knowledge of partners was large.   We found one significant interaction effect of financial management styles and bank account type (not reported in Table 6). The overview of expenses of partner 2 in male-dominant financial management style was higher with separate bank accounts than with joint accounts, whereas the overview of expenses of partner 2 in femaledominant financial management style was higher with joint accounts than with separate bank accounts.
There is a clear historical trend in the literature from male/husband-dominant (Becker, 1981;Ferber & Lee, 1974) financial management of households in the 1980s to syncratic/joint money management, financial decision making, and partial or full pooling/sharing of income between partners nowadays. This trend seems to be reflected in the large prevalence of joint decision making in our study in The Netherlands.
We found that partners of households with a joint bank account are likely to be married, that their families are small, that they pool their income, and that they have a relatively large financial knowledge/literacy. We speculate that earlyrelationship partners bring their separate bank and savings accounts into their marriage or cohabitation, and then open a joint bank and savings account for joint savings and expenses, such as buying a house, home improvement, expenses on children, and holiday trips. This is a case of partial pooling (Burgoyne et al., 2007) Partners not only bring their bank and savings accounts into their marriage or cohabitation, they also bring in their financial literacy. With a longer duration of the relationship, it is likely that the financially more knowledgeable partner will do the financial management and has more "say" in the major financial decisions of the household.
This means that with a longer duration of the relationship and more division of labour, the role of the family financial officer (FFO) will become more apparent. However, like Muehlbacher et al.
(2009), we found no effect of age in this study. it is likely that his/her partner is less involved and less satisfied with the household financial outcomes. With a syncratic money-management style, it is likely that partners discuss purchases and expenses beforehand, control each other, avoid impulsivity, correct mistakes, and thus avoid financial problems. Barber and Odean (2001) found that overconfidence in stock investment decision making, as reflected in excessive trade and lower returns, is higher for men than for women. However, the difference is smaller for married partners than for single individuals, suggesting beneficial effects of joint financial management. Joint decision making, self-control and partner control seem to be the ingredients for avoiding financial problems.
The avoidance of financial problems is likely to be a strong determinant of financial satisfaction, welfare and well-being of partners. Two dimensions may be distinguished in financial well-being: current money-management stress and expected future financial security (Netemeyer et al., 2018). However, Kan and Laurie (2013) do not find differences in well-being of spouses between those who hold joint investments and those who hold separate investments. In future studies, the relationships between financial problems and these dimensions of well-being should be investigated further.
Results of this study may be used by banks to segment and advise their customers, and for advice and policy on financial literacy, expenditure, debt and saving of consumers in households. For example, relationship partners who just have started cohabitation or marriage might be offered a joint account for free (at least for some time), thus hopefully stimulating further joint financial decision making and the prevention of financial problems.