Serenity glanced over her shoulder as her significant other dragged himself into the kitchen after a long day at work. His face looked tired and emotionless, and she could tell something was wrong. When Serenity gently inquired about his change in demeaner, he hesitated and then revealed the truth—he had lost his job. The job that had supported their comfortable and beautiful lives was gone. Moreover, what they thought was a small bump in the road was about to turn into a mountain of debt and financial struggle. They were about to face the full force of the Great Recession of 2007-2009.[1]

The Great Recession was a challenging time for many. As the economy slowed, cash flow dwindled and financial stability faltered. The crisis began with lenient and predatory lending practices. In some cases, banks offered rates on mortgages and other loans that started as low-interest and then later grew to the point where borrowers could no longer afford the payments. These and other practices led to widespread defaults—when borrowers were not able to meet their payments—causing a significant loss from unmet expected returns. At first, home prices soared, and businesses thrived—until the rising cost became unaffordable. These factors, among others, led to a sharp rise in unemployment in the United States and sent shockwaves through the global economy.[2]
Why Hard Times Can Make Managing Money Harder
Dr. Jeff Dew and Dr. Jing Jian Xiao sought to explore how the Great Recession impacted financial management behavior among cohabiting and married couples. Analyzing data from the summer of 2009 (shortly after recession conditions began to improve), they discovered that feelings of economic instability often led couples to engage in less responsible financial behavior.[3]
The first reason aligns with a concept developed by an American economist in 1957 known as the permanent income hypothesis.[4]
However, it is not always the desire to live comfortably that drives unwise financial decisions. Often, it is a way of coping with the stress of financial hardship. Even when couples understand that saving and investing are better long-term strategies, the daunting process of financial planning can feel overwhelming. As a result, they may prioritize temporary relief over future stability—pulling from savings, paying only the minimum on credit cards bills, or even delaying bill payments.
Unfortunately, this short-term comfort is merely a façade. While it may offer momentary relief, such coping behaviors often lead to a worse financial situation than where the couple started.3
The Hidden Costs of Unhealthy Financial Behaviors on Relationships
Though it has been years since the Great Recession, we all can still experience our own personal recessions. When things seem like they could not get any worse, it turns out that poor financial management often leads to diminished happiness in relationships. Dew and Xiao explained that when couples prioritize short-term comfort over long-term stability, “they pay a relationship cost.”3 This is likely because increased debt or financial stress from improper financial management can lead to less quality time together and heightened relationship stress.[5]
Takeaways - From Recession to Progression
How can you and your significant other get out of your own “recession?”

1. Assess your standard of living. Are you living by what you want, or based on what you need? Your home is likely your largest expense. Misguided financial decisions about homes—encouraged by banks trying to maximize their own profits—played a large part in leading to the Great Recession.2 Experts suggest that the total cost of your home should not exceed 2.5 times the combined gross annual income of you and your partner. Additionally, the monthly mortgage payments should not exceed 28% of your gross monthly income.[6]
2. Altruistic communication is key. Dew and Xiao emphasized the importance of communication and problem solving in relationships.3 Developing these attributes can help you and your partner to maintain a strong relationship, especially during times of financial uncertainty.
Everything begins with smart financial planning, which will benefit you both financially and romantically in the long run.
References:
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