Academic journal article The Journal of Consumer Affairs

Household Money Management: Recognizing Nontraditional Couples

Academic journal article The Journal of Consumer Affairs

Household Money Management: Recognizing Nontraditional Couples

Article excerpt

The changing nature of today's economy, coupled with demographic trends, has created new consumer issues in the area of household financial management. In many cases, financial institutions and other relevant organizations have overlooked an emerging customer group. Literature, application forms, and administrative processes employed to sell financial services and products which involve financing may fail to take into account the different decision-making roles played by household members in nontraditional partnerships. Marketing strategy based only on assumptions of the traditional household will increasingly become ineffective with the decline of the number of one-income, first-marriage, nuclear families in which the male partner is assumed to be provider and decider of the household's finances. Consumer frustration and dissatisfaction may well be the result of such oversight.

Similar to the business environment, where the unit of decision making is not the individual but the group, the family has been called the "most important business conference in America" (Converse, Huegy, and Mitchell 1958, 38). In recent years no other social institution has undergone more rapid transformation than the family. Today, fewer than 27 percent of the nation's households fit the traditional definition of a family (mother and father living with their children under 18 or stepparents and stepchildren) (U.S. Department of Commerce 1989). Married couples continue to decline as a percentage of the 91.1 million households in America. While married couples held a 61 percent share of all households in 1980, they had a 58 percent share by 1988 (Waldrop 1989). Those who are married include both first-time and subsequent marriages; nonmarried households include singles, divorced, and widowed. Due to the aging of the population, couples without children may be empty nesters. However, some younger couples have opted not to have children.

The divorce rate doubled from 1965 to an all-time high in 1981. The U.S. Department of Commerce (1989) estimated divorce rate for second marriages is 60 percent. People who have pooled their assets and incomes in marriages that end in divorce may view the institution and its financial implications differently than those who have not experienced divorce. The disentangling of finances during divorce may impact the manner in which divorced individuals approach joint financial decision making in subsequent relationships/marriages. A prenuptial contract is a formalization of such perceived risk for many couples.

These demographic trends challenge assumptions based upon the behavior of so-called traditional households and place the relevance of earlier research findings in question for current households. Some researchers, in fact, feel that the family has become a nebulous concept that defies precise definition (Schurenberg 1989). The majority of studies on family financial decision making were undertaken before these trends developed so distinctly.


Researchers have previously examined the interactive and dynamic nature of household financial decisions. The focus of such studies has been on married couples. However, distinction seldom has been made between first marriages and remarriages. In most of these studies, joint financial decisions were divided into several categories with primary emphasis on allocation decisions between spending and savings.

Two important early studies question traditional beliefs regarding husband/wife decision-making roles. Sharp and Mott (1956) interviewed 749 wives in the greater Detroit area on family economic decision making. Considerable variation was found in the relative influence of each spouse on different economic choices. For instance, while husbands exerted stronger influence in automobile purchases, they seldom made final decisions on food expenditures. Also, married couples tended to make joint decisions on home purchases and vacations. …

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