Americans’ problems with financial literacy can play out differently for everyone, even members of the same household.
Researchers at CU Boulder and The University of Texas at Austin found couples often grow farther apart in household finance skills and interest in learning those skills over time. In a recently published paper in the Journal of Consumer Research, the researchers found that even a small gap can become a big problem as one partner takes over as “household chief financial officer (CFO).”
“A lot of financial illiteracy comes from the fact that one member of a couple relies on his or her partner to handle the household finances,” said author John Lynch, founder of the Center for Research on Consumer Financial Decision Making at the Leeds School of Business at CU Boulder, which funded the study.
If the household CFO dies or the couple divorces after a lengthy period of time, the non-CFO partner could be left trying to quickly make up those years of financial experience.
But the good news: You can try to assess if this phenomenon is true for your relationship, and if it is, start to bridge the financial literacy gap.
Lynch recommends gauging who makes the household’s financial decisions on a scale of zero to 100. If you are completely responsible, mark yourself at 100. If it’s your partner who holds power of the purse, mark yourself at zero. If you share equally, it’s 50.
Then he suggests each partner answer a few financial literacy questions such as these:
If your knowledge-level is much higher than your partner’s, Lynch said, “Then it’s time to start bringing him or her into the conversation.”