Stories | February 13, 2018

How happy relationships relate to money

Mike Norton and Ximena Garcia-Rada on what the science can tell us.

Many people might find it tough to choose what’s more important: happiness, or managing money well. Individual happiness and good money management are closely connected, our ING International Survey shows.

But we at ING eZonomics wanted to dig deeper – so we asked Harvard researchers Mike Norton and Ximena Garcia-Rada what they’ve learned about the links between money, happiness and relationships.

What can studies tell us about how people manage money when they’re in relationships?
Mike: Money and relationships are complicated, and these two topics are intertwined. We often hear about couples fighting over money and disagreeing about how to allocate their income.

Academics are increasingly interested in understanding financial decision making in relationships. We have some exploratory evidence suggesting that couples who share their finances are happier and more satisfied with their relationship.

This is early-stage work, however, and we are conducting further research to examine this relationship and understand if sharing finances leads to more satisfied couples – or if couples who are more satisfied decide to share their finances.

Can you tell us a bit more about that?
Mike: For example, research by Adrian Ward (Assistant Professor at the University of Texas at Austin) shows that couples typically divide up who performs which task – such as who manages the money – and these decisions then carry forward for decades.

As a result, people can become less competent with finance over time, because their partner handles all aspects. This suggests that splitting finances instead of sharing them can be counterproductive in some ways.

What further connection can be made between money, happiness and relationships?
Mike (pictured, below): We have found that spending money on others in general makes people happier than spending it on themselves, and this is true for couples. In research with Ashley Whillans (Assistant Professor at Harvard Business School), we examine trade-offs between time and happiness, and specifically, how people can use their time better to live happier lives.

Within couples, we show that spending money to buy your partner free time (for example, paying someone to clean the house) is a predictor of relationship satisfaction. This seems more boring than typical romantic purchases like dinner or flowers, but what people often really want and need is more time.

In your last chat with ING eZonomics, you alluded to your recent research interest in ritual, and the potential for little rituals to augment self-discipline – and that this knowledge might be used to boost financial education and/or capability in future. Tell us more about that.

Mike: We have research showing that when people require self-control for a goal – such as eating healthily or exercising, or even being nice to other people – they have trouble even initiating the action.

One intervention we developed is to ask people to enact brief rituals when facing such decisions. Rituals are in themselves disciplined: certain steps you need to take, in a certain order. We show that the discipline in rituals can then be translated to greater self-discipline and self-control.

Ximena: In the context of romantic relationships, we have a project with Ovul Sezer (Assistant Professor at the University of North Carolina) looking at how having relationship rituals, ranging from weekly date nights to cooking together to bedroom activities, can affect relationship satisfaction.

We find that couples who engage in relationship rituals report being more satisfied and this happens because couples feel more committed when they agree on a relationship ritual. Note: both the partners understand that they have this relationship ritual – defined as an activity that is repeated over time and that has symbolic meaning for both partners: this is key. So it’s about how the couple conceptualise the activity, and more importantly, that both members agree on whether they have a ritual or not.

Mike: I think my favourite part of the project is that the couple can disagree on whether they have a ritual – and those that disagree are less happy!

What’s the best thing a couple can do with money in their relationship to foster happiness? What’s the stupidest thing they could do?
Ximena (pictured, above): Ongoing research (also being conducted by other researchers) suggests that combining finances and being open about finances might come with relationship benefits. We have some initial evidence to support this idea.

More broadly, Mike and I have another project with Rebecca Ratner (Professor at the University of Maryland) studying how sharing experiences in the context of close relationships comes with relational benefits. Specifically, we argue that feelings of togetherness could have implications for how couples go through experiences in life and how they make decisions. In other words, there are benefits to being one unit, rather than two members of a team, for couples.

How important is money to your own happiness? What changes, if any, have you made (or wish you could make!) to your own money management practices with a view to becoming happier overall?
Ximena: Personally, I feel that it’s not about how much money we have, per se. It’s more subjective. Do you feel comfortable with what you have, and with how you spend it? For me, spending money on an experience, like dinner or a trip, rather than material things is very important. That’s some research I’ve introduced into my life.

Mike: More money is never worse than having less money – because we still find that people with more money are happier. But how you use the money and how you think about money are critical. How many bathrooms do you really need to be happy? If you ask people who have four or five bathrooms, they say they absolutely need four or five.

Ximena: One thing I’ve done, something that’s made a huge difference that I didn’t predict, is spending money on time-saving purchases [building on Ashley and Mike’s work on ‘buying’ happiness]. For example, last year I bought a Roomba (a vacuum-cleaner robot) and it was one of the best purchases I’ve ever made because it liberated me from an unpleasant household chore.

Mike: I think I should get one! In general, we are hopeful that many researchers will devote their attention to the links between money and happiness, especially in the context of close relationships. The more research we have, the better advice we can give to people on how to manage their finances – and their relationships.

eZonomics team
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