#RelationshipGoals. How American Couples are Saving Together

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1 #RelationshipGoals How American Couples are Saving Together

2 Overview The ways we couple-up, cohabitate and balance responsibilities in relationships have changed dramatically in the past decade. Not only are Americans getting married later, 1 but more couples are moving in together before making a lifelong commitment, 2 and a growing number of families are dual-income. 3 All of these changes have continued to complicate what is already a challenging aspect of any relationship: managing money, together. Countless surveys have shown that money is a top source of conflict and stress in relationships, and that hiding purchases or keeping secret bank accounts from your spouse or partner happens more often than you think. 4 But the reality is that across the United States, an estimated 73 million people report finding it difficult to get by financially. 5 Real wages are not much higher than they were in 1989, 6 and without much financial literacy, we re responsible for navigating the complex world of saving and investing on our own. For most of us, money is just a means to an end. That end is a life full of dreams achieved, and time spent with family and friends. There shouldn t be constant worry about finances, but rather spending time - and money - on what brings you joy and meaning. Most people who manage their family s finances have both big and small goals they re constantly working toward. Beyond setting yourself up for a comfortable retirement, there are weddings, dream vacations and your forever home, among other aspirations for the future. To better understand how Americans are saving together, Twine partnered with Equation Research to ask 1,000 adults ages 25+, who are in long-term relationships, how they save collaboratively with their partner and exactly what they are saving toward. FOR THIS REPORT, A LONG-TERM RELATIONSHIP IS DEFINED AS A COMMITTED RELATIONSHIP THAT THE RESPONDENT HAS BEEN IN FOR TWO YEARS OR MORE. THIS INCLUDES SERIOUS RELATIONSHIPS, MARRIAGES, DOMESTIC PARTNERSHIPS, ENGAGED COUPLES, ETC. This report shares insights into how modern couples are saving, goal-setting and communicating about their life dreams. 2

3 Five Stats to Know 30% 44% 62% of millennials in relationships report keeping a financial secret from their partner 7 Young couples are MORE LIKELY THAN EVER to be earning similar incomes 10 have less than $400 of Americans cite saved for emergencies 8 money as their top source of stress 9 41% Only 41% of Americans have a budget 11 Key Takeaways ONE. TWO. THREE. Impatience doesn t pay off. While most people in relationships have life goals, they are likely to drop them when priorities change or something else comes up. Does collaborative saving give you cold feet? While many couples combine finances, almost one-third feel stressed, anxious, annoyed or confused when it comes to saving money with their partner. Can we talk? Communication is the biggest challenge when it comes to saving money together. A whopping 70 percent of couples said they are just talking to their partner sporadically in conversation about finances, and few are regularly consulting financial professionals for advice. 3

4 01. Setting #Goals You don t need your whole future mapped out to have life goals. LIFE GOALS, ALSO CALLED MEDIUM-TERM GOALS, When asked if they have a life goal, 88 percent of respondents indicated they have one or more. Here are the most common goals: ARE FINANCIAL MILESTONES FAMILIES WORK TOWARD BEFORE RETIREMENT AND ARE TYPICALLY ACHIEVED BETWEEN 3-10 YEARS. THIS COULD INCLUDE GOALS LIKE BUYING YOUR FIRST HOME, SAVING TO START A FAMILY, PAYING FOR A WEDDING, OR GOING ON A DREAM VACATION. Most Common Financial Life Goals 37% Emergency fund 28% Vacation 24% Home renovations 22% New car 19% College tuition for kids 15% Down payment 6% Second home 5% New gadgets 3% Wedding 4

5 More people are focused on near-term goals (achieved within the next 1-3 years), that offer SAVINGS HACK: immediate gratification, with a majority of respondents saving for emergency funds and vacations. It makes sense that the more immediate needs take priority - you might be planning to take a vacation before buying a house a few years down the road. That said, people still have the future in mind. According to the results, 62 percent of respondents (and 74 percent of millennials) are currently contributing to a 401(k). PICK A GOAL YOU RE WORKING TO ACHIEVE IN THE NEXT ONE, FIVE, 10, EVEN 20 YEARS, AND FIGURE OUT HOW MUCH TO SAVE MONTHLY. ESTABLISH A TIMELINE FOR WHEN YOU WANT TO ACCOMPLISH YOUR GOAL, THEN COMMIT YOURSELF TO AN AUTOMATIC SAVINGS PLAN SO YOU CAN SET IT AND FORGET IT. - Uri Pomerantz, CEO, Twine Saving for goals can be tough. When asked why life goals are abandoned, most respondents indicated that life and unexpected expenses simply get in the way. Most Common Reasons Goals are Abandoned #1 Something else comes up (34%) #2 Personal priorities or goals change (27%) #3 Change of circumstance (divorce, job loss, etc.) (17%) #4 Not enough money to save (11%) #5 Takes too long to achieve goal (3%) 5

6 02. Saving Together Americans have ambitious savings goals. Americans have ambitious savings goals, which may explain why our findings showed that many couples do combine their finances - especially to reach a life goal - and the majority approach the idea of doing so with excitement and optimism. Reasons for taking the plunge included, that s what families do (55 percent), it makes life easier (28 percent) and it avoids arguments over money (7 percent). How Couples are Saving Together 74% share a checking account 68% share one or more credit cards 68% share a savings account Despite the willingness to pool finances to buy that new car or put a down payment on a house, there isn t much patience when it comes to the amount of time people are willing to actually save for those goals. Thirty-nine percent of respondents will only save for one year before throwing in the towel - a short amount of time when it comes to building significant savings, especially for things like a home. 6

7 To really pull the curtain back on saving versus spending, respondents were asked to share how they allocate extra funds - whether they are gifted, received as a bonus, or won. The results showed that the likelihood to impulse purchase or splurge when a little extra money comes in may be causing set backs toward achieving life goals: Where Would You Put Extra Cash? $50 Spend it on myself Towards a shared life goal In a savings or retirement account $100 $500 42% 55% $1,000 $5,000 66% 56% 69% 7

8 In reality, how often do we receive large sums of money at once? Relying on a yearly tax return, holiday bonus or birthday gift to reach financial goals will delay crossing the finish the line, and given that many are only willing to save for about SAVINGS HACK: SAVE IN SMALLER, CONSISTENT AMOUNTS. IT S MORE SUCCESSFUL, AND FAR MORE PREDICTABLE. a year, the chances couples will actually achieve their goals declines. Not everyone is as willing and optimistic about their finances and saving. Fear and confusion can plague people about personal finances, saving and investing. That fear creates roadblocks for those working towards a financial goal, and ultimately deters people altogether from combining finances with their partner. According to our survey, nearly one-third of U.S. men and women noted fear, confusion and anxiety when thinking about saving with a loved one. Reasons Couples Hold Off on Combining Finances 51% 20% 14% 7% 5% 3% We made a joint decision and prefer to manage everything separately We haven t had the time to combine everything It s too complicated I don t know where to start with combining our finances I don t trust my partner to have access to a shared account I m embarrassed to share my finances with my partner 8

9 03. Getting on the Same Page #RealTalk Talking about money is rarely comfortable. Talking about money is rarely comfortable, especially when it happens between couples who may have conflicting viewpoints on how that money should be saved and spent. The results of the study suggested that there is room for improvement when it comes to talking about financial goals. As noted in previous sections, couples are on the right track in setting goals and saving together, but it s the communication that appears to be a barrier to aligning and achieving those goals. While 43 percent of respondents indicated they talk to their partner about financial goals daily or weekly, it s the how and where they are talking about these goals that may be impacting getting on the same page and working toward achieving these goals. Most common places couples talk about their financial goals #1 Sporadically during casual conversation (70%) #2 Over a meal at home (52%) #3 Over a meal in a restaurant (20%) #4 Over text or (11%) #5 A predetermined meeting time (9%) 9

10 It s not terribly surprising to see that couples who are managing busy work and life schedules aren t setting up time to sit and talk about their finances. However, when you consider that 52 percent have never consulted a financial professional about their goals, it raises a red flag that the serious conversations about goal setting and planning aren t happening at all. S AV I N G S H AC K : CONSIDER USING TECHNOLOGY TO HELP KEEP YOU MOVING IN THE RIGHT DIRECTION AND STAY ON THE SAME PAGE ABOUT YOUR GOALS. OF THE 38 PERCENT OF SURVEY RESPONDENTS WHO ARE USING AN APP OR TECHNOLOGY TO MANAGE OR SAVE THEIR MONEY, A STRONG MAJORITY (84 PERCENT) SAID IT HAS HELPED THEM IN SOME WAY - WHETHER THAT S SAVING MORE MONEY, SAVING FASTER OR FORCING YOU TO SAVE. 10

11 Looking Ahead After analyzing the views of 1,000 consumers in long-term relationships about their collaborative savings habits, a few key trends emerged. By far the biggest challenge that couples face is communication. Only four in 10 couples discuss their financial goals with each other and for the vast majority (70 percent), the conversations are sporadic and casual, rather than planned discussions. Only a small sliver (nine percent) of couples discuss their finances during pre-planned meetings. While couples struggle to communicate effectively about their finances, the good news is that the desire to save together is there. Most couples share both a checking and savings account, citing the fact that combining finances is convenient and simply what families do. Most couples feel optimistic and motivated to save with their partner. The reality is that combining and managing finances alone or as a couple is complicated. Couples need better education, support and real world tips about how to maximize family funds in order to manage and reach their life goals all in one place. Technology that taps into behavioral finance and machine learning algorithms, nudging people along in their savings journey, is the next generation of saving. Technology can make it easy and painless to save. Even when something unexpected pops up (the top reason people abandon financial goals) they should still be able to work toward those goals because they have a plan set. 11

12 ABOUT TWINE Twine is the first savings app built for two. It simplifies saving for major milestones like weddings, down payments and vacations. With a simple interface and intuitive dashboard, Twine makes it easy to open and manage goal accounts and keeps you and your partner on the same page. Twine is backed by John Hancock, leveraging the company s 150 years of stability and expertise to provide bank-level security to keep user information and accounts safe. Twine is currently available for ios in the App Store. To download, visit Twine is a service provided by John Hancock Personal Financial Services, LLC, an SEC registered investment adviser. ABOUT JOHN HANCOCK AND MANULIFE John Hancock is a division of Manulife Financial Corporation, a leading international financial services group that helps people achieve their dreams and aspirations by putting customers needs first and providing the right advice and solutions. We operate primarily as John Hancock in the United States, and Manulife elsewhere. We provide financial advice, insurance and wealth and asset management solutions for individuals, groups and institutions. Assets under management and administration by Manulife and its subsidiaries were over $1 trillion (US$806 billion) as of September 30, Manulife Financial Corporation trades as MFC on the TSX, NYSE, and PSE, and under 945 on the SEHK. Manulife can be found at manulife.com. One of the largest life insurers in the United States, John Hancock supports approximately 10 million Americans with a broad range of financial products, including life insurance, annuities, investments, 401(k) plans, and college savings plans. We also offer advice through Signator, a network of independent financial advisors. Additional information about John Hancock may be found at johnhancock.com. METHODOLOGY This report was commissioned by John Hancock/Twine and fielded by independent research firm Equation Research in November The responses were generated from a survey of 1,013 people ages 25+, who self-identified as being in a committed relationship for two years or more and have a household income of at least $50,

13 SOURCES 1. Cohn, D., Passel, J. S., Wang, W., & Livingston, G. (2011, December 14). Barely Half of U.S. Adults Are Married A Record Low. Pew Research Center. Available Here. 2. Koebler, J. (2013, April 4). More People Than Ever Living Together Before Marriage. U.S. News & World Report. Available Here. 3. Wang, W., Parker, K., & Taylor, P. (2013, May 29). Breadwinner Moms. Pew Research Center. Available Here. 4. Mecia, T. (2016, February 2). Poll: 13 million Americans commit financial infidelity. CreditCards.com. Available Here. 5. Report on the Economic Well-Being of U.S. Households in (2017, May). The Federal Reserve. Available Here. 6. U.S. Bureau of Labor Statistics, Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over. (2017). Federal Reserve Bank of St. Louis. Available Here. 7. TD Bank Love & Money Report. (2017, July). TD Bank. Available Here. 8. Report on the Economic Well-Being of U.S. Households in (2017, May). The Federal Reserve. Available Here. 9. Stress in America: The State of Our Nation. (2017, November 1). American Psychological Association. Available Here. 10. Wives Earnings Make Gains Relative to Husbands, Census Bureau Reports. (2015, November 23). U.S. Census Bureau. Available Here U.S. Bank Possibility Index. (2016). U.S. Bank. Available Here. 13