About half of emerging adults in the U.S. live with their parents,[1] which highlights the financial challenges they face, such as student loan debt, low income, and high living costs. These challenges significantly impact their financial situations and lifestyles. Notably, financial issues play a crucial role in the success of romantic relationships among emerging adults.
An interesting study led by Rachel Okamoto[2] explored the connections between financial self-efficacy, financial behaviors, and relationship well-being for emerging adults in the U.S. The study found that having high financial self-efficacy—confidence in managing personal finances—positively influences romantic relationships. Financially confident couples often experience greater satisfaction in their relationships. Here’s how…
Emerging adults’ perception of their financial management abilities can directly affect their financial behaviors. These financial behaviors include the ability to plan and achieve personal financial goals such as by maintaining a budget and saving consistently. When individuals feel confident in their financial abilities, they tend to be more decisive and effective in making financial choices, resulting in better financial behaviors.[3]
Financial behaviors, in turn, impact romantic relationships. The way couples handle their finances is crucial for relationship success. By implementing effective financial practices, couples can manage their resources more efficiently, reduce stress, and create better financial outcomes.
This offers valuable insights for couples: they can improve their relationships by boosting their financial confidence and adopting healthy financial behaviors. This combination not only ensures a healthy financial future but also fosters lasting harmony in their relationships.
Takeaways:
Handle finances together as a couple.
Strengthening romantic relationships in young couples involves developing sound financial habits, such as setting clear goals, creating a budget, and reviewing finances together. By focusing on these practices, couples can enhance their financial management skills and reduce stress, leading to greater relationship satisfaction. Additionally, building financial confidence through education and open communication can further improve relationship dynamics. Couples can boost their financial confidence by learning about financial planning, setting joint financial goals, and supporting each other in financial decisions.
Seek financial education and practical experience.
Financial educators and parents can help children, adolescents, and emerging adults build their financial self-efficacy through financial socialization, particularly through experiential learning opportunities related to money. This approach seems essential for developing financial self-efficacy.[4] Helping emerging adults enhance their confidence in executing financial behaviors may indirectly help their relationships thrive. Establishing financial self-efficacy through education and practical experience is vital for individual and relational success. By enhancing confidence in financial management, couples can improve their romantic relationships and better navigate financial challenges. Mastering financial skills not only secures their financial future but also improves relationship dynamics and overall well-being.
References:
[1] Fry, R., Jeffery, S. P., & D’Vera, C. (2020). A majority of young adults in the U.S. live with their parents for the first time since the Great Depression. Pew Research Center. https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-of-young-adults-in-the-us-live-with-their-parents-for-the-first-time-since-the-great-depression/
[2] Okamoto, R. M., Saxey, M. T., Wikle, J. S., & LeBaron-Black, A. B. (2024). Confident commitment: Financial self-efficacy's indirect association with romantic relationship flourishing through financial behaviors. Journal of Family and Economic Issues, 45(1), 35-44. https://doi.org/10.1007/s10834-023-09903-1
[3] Farrell, L., Fry, T. R. L., & Risse, L. (2016). The significance of financial self-efficacy in explaining women’s personal finance behavior. Journal of Economic Psychology, 54, 85–99. https://doi.org/10.1016/j.joep.2015.07.001
[4] LeBaron, A. B., Runyan, S., Jorgensen, B. L., Marks, L. D., Li, X., & Hill, E. J. (2019). Practice makes perfect: Experiential learning as a method for financial socialization. Journal of Family Issues, 40(4), 435–463.