Financial Integration and Relationship Transitions of Young Adult Cohabiters

Abstract Despite increasing rates of pre-marital cohabi-

tation, the majority of research on household financial

practices in the United States has focused on married

couples. This study explored ways young adult cohabiters

(N = 691) financially combined their lives and the asso-

ciations with subsequent relationship outcomes. Results

indicated cohabiters were intertwining credit histories and

bank accounts, and acquiring assets such as purchasing

homes together. Sharing a mortgage was associated with an

increased likelihood of marriage, whereas joint credit card

accounts increased the odds of dissolution. Cohabiters with

an intent to marry were much more likely to start inte-

grating their finances prior to marriage. This study sheds

light on the heterogeneous ways that a recent cohort of

young adult couples manages their finances and navigates

relationships.

Keywords Cohabitation � Debt � Investment � Marital intent � Pooling � Young adult

Introduction

Radical changes in the nature of romantic relationships are

reflected in the decoupling of what were once considered

‘‘marital behaviors’’ from the institution of marriage.

Cohabiters increasingly engage in many of the same

practices of shared living as do married couples, benefitting

from economies of scale, risk pooling, production of rela-

tionship-specific capital, and joint consumption without

marrying (Lundberg and Pollak 2013). These changes have

increased the attractiveness of cohabitation, whose finan-

cial and social barriers are considered lower than marriage

(Sassler 2004). Cohabitation rates continue to rise and

unmarried coresidential living has become the modal

pathway to union formation for women and men in early

and young adulthood (Addo 2012; Sassler 2010). And yet,

in spite of high rates of cohabitation dissolution and serial

cohabitation (Guzzo 2014; Lichter et al. 2010) young

adults still marry, and nearly two thirds of recent marriages

were preceded by cohabitation (Kennedy and Bumpass

2008; Manning 2013).

Much of the literature on the cohesion and relationship

progression of cohabiters has focused on either implicit

signs or subjective measures of commitment and relation-

ship intentions (Brown and Booth 1996; Sassler and

McNally 2003) rather than explicit or purposeful actions of

relationship cohesion. Romantic commitment, or dedica-

tion, is important for establishing the emotional connection

between partners, whereas constraints provide permanence

to a relationship shaping transitions from one relationship

phase to the next (Stanley et al. 2010). Constraints that are

taken on with purpose (such as establishing a shared bank

account) as opposed to ones adopted by accident (e.g.,

unplanned pregnancy) are equally important to study

because they provide insight into the sort of scaffolding

couples build around their relationships. When couples

engage in joint financial practices they may be doing so as

a matter of dedication (e.g., trust, commitment to the

future, etc.) or for short-term convenience (e.g., costs

savings). In either event, they believe that these practices

will make their relationship and life together better (Addo

and Sassler 2010; Treas 1993).

& Fenaba R. Addo faddo@wisc.edu

1 Department of Consumer Science, School of Human

Ecology, University of Wisconsin-Madison, 1300 Linden

Drive 4204 Nancy Nicholas Hall, Madison, WI 53706, USA

123

J Fam Econ Iss (2017) 38:84–99

DOI 10.1007/s10834-016-9490-7

http://crossmark.crossref.org/dialog/?doi=10.1007/s10834-016-9490-7&domain=pdf
http://crossmark.crossref.org/dialog/?doi=10.1007/s10834-016-9490-7&domain=pdf
Yet, empirical research on financial management and

income pooling behavior of couples in the United States

has predominantly focused on married couples. The pur-

pose of this study was to explore the individual and couple-

level motivations for assuming financial integration prac-

tices among young adult cohabiters and within cohabiting

unions, and the relationship between integrated financial

practices and subsequent relationship status two years later.

The analysis used data on 691 heterosexual current

cohabiters interviewed over two waves from the Young

Adult Survey of the National Longitudinal Study of Youth

1979.1 Understanding how cohabiters arrange their

households can help explain the subsequent relationship

steps, whether it is to marriage, dissolution, or remaining in

a cohabiting union. It may also assist with distinguishing

cohabiters who are engaging in cohabitation as an alter-

native to single from the alternative to marriage and pre-

cursor to marriage groups. Does engaging in joint financial

management practices serve as a precursor to matrimony,

or are some young adults these days playing house with

little intent of transitioning to marriage?

This study contributes to a growing body of research

examining the financial lives and the accumulation of

relationship-specific capital within cohabitation. Young

adult cohabiters are disproportionately drawn from popu-

lations with less than a college degree, earn less, and

experienced family instability during adolescence (Sassler

and Miller 2011; Kennedy and Bumpass 2008). It is

equally important to consider the ability to participate in a

practice that has high exit costs when studying economi-

cally vulnerable populations, such as low-income young

adults and those who come from disadvantaged back-

grounds, a large and growing share of a policy-relevant

population (Gibson-Davis 2009; Kenney 2004; Waller and

McLanahan 2005). Family scholars who generalize rela-

tionship behaviors to all cohabiters may misrepresent the

processes shaping the behaviors of less advantaged, more

marginalized groups.

Collectivized Systems of Money Management

in Marriage and Cohabitation

Family scholars studying how couples manage their

financial situations have relied, for theoretical grounding,

on the notion of transaction costs similar to those engaged

in by firms (Williamson 1981). According to this per-

spective, couples engage in various forms of economic

organization so as to minimize the costs of conducting

exchanges between partners, while maximizing self-inter-

est (Oropesa et al. 2003; Treas 1993). A collective, or joint,

approach to family finances assigns precedence to non-

market mechanisms of exchange over economic principles

of self-interest (Treas 1993). This approach minimizes the

costs of coordinating and monitoring arrangements, and

potentially can lead to fewer disagreements. But separate

fiscal management systems—when partners maintain pri-

vatized versus collectivized money management arrange-

ments—increased over the past few decades (Heimdal and

Houseknecht 2003; Oropesa et al. 2003; Treas 1993), in

part due to increases in marital instability and the rise of

cohabitation. Difficulties with ensuring relative exchange

costs are borne equitably by both partners increase the

likelihood that separate fiscal arrangements will be main-

tained. Uncertainty with the future of the relationship,

previous experiences with failed relationships, or lack of

trust reduce the incentives to pool finances, and increase

the attractiveness of keeping separate systems.

Previous studies have found that couples’ decisions

about who will manage their financial resources and whe-

ther they choose to pool these resources or maintain sep-

arate pots reflect the level of investment and integration in

a relationship (Heimdal and Houseknecht 2003; Oropesa

et al. 2003; Treas 1993). Social scientists who study

resource management often distinguish between collec-

tivized strategies, in which couples pool their assets, and

private strategies that emphasize the separate well-being of

individual partners and individual autonomy (Pahl 1989;

Vogler and Pahl 1994). Collectivist household manage-

ment systems represent a more egalitarian system of

financial management, and become a means for creating

and maintaining a couple-level identity (Bellah et al. 1985).

Joint management projects a gendered sense of fairness

regarding the division of labor within the household.

Driving this belief is the idea that control and management

over the resources coincide with decision-making (Bennett

2013).

Increased rates of pre-marital cohabitation and delayed

marriage have driven interest in examining economic

resource allocation behavior and the role of joint invest-

ment within cohabiting unions. In the United States,

cohabiters do not have the legal protections afforded

married couples (Brines and Joyner 1999; Perelli-Harris

and Gassen 2012). They have no legal rights to a partner’s

assets, and cannot sue for alimony or debts accumulated

within the union upon dissolution (Bowman 2010).2,3

Family researchers believe the increased risk of financial

1 https://www.nlsinfo.org/content/cohorts/ NLSY79-Children.

2 There is one exception, the ten states that permit common law

marriages: Alabama, Colorado, Iowa, Kansas, Montana, Rhode

Island, South Carolina, Texas, Utah, and the District of Colombia)

(Cornell Law). 3 Community property laws only recognize marital unions. There are

currently nine community property states in the US: Arizona,

California, Idaho, Louisiana, Nevada, New Mexico, Texas, Wash-

ington, and Wisconsin; Alaska requires both partners opt-in (IRS).

J Fam Econ Iss (2017) 38:84–99 85

123

https://www.nlsinfo.org/content/cohorts/
loss after separation reduces the initial amount of invest-

ment cohabiters contribute, compared to married couples.

It also deters the desire to invest in relationship-specific

capital, like joint financial practices. The lack of financial

integration may reflect partners’ beliefs that the relation-

ship will not last, and a subsequent desire to not increase

further the costs of eventual dissolution (Burgoyne et al.

2006). Young adult cohabiters who experience high rates

of relationship turnover (Lichter et al. 2010) may be

hesitant to pool finances and feel the need to maintain

individual systems. Nock (1995) argued that such practices

indicated couples were less committed because they had

lowered the perceived costs of ending the relationship.

Cohabiters are consistently less likely to pool finances

than are married couples (Addo and Sassler 2010; Heimdal

and Houseknecht 2003). Yet for those who do, pooling has

been associated with relationship cohesion and better

relationship quality (Addo and Sassler 2010; Brines and

Joyner 1999). Integrating finances while living together in

an informal union can also allow partners to become

familiar with their partner’s financial status and consump-

tion behaviors; sometimes this can alter the trajectory of

the relationship (Dew and Price 2011). Whereas financial

integration can work in tandem with positive relationship

quality measures, negative financial behaviors can also

work in the opposite direction, with negative information

leading to relationship dissolution. Carrying lots of debt,

for example, has been found to increase the likelihood of

divorce among married couples (Dew 2007). To summa-

rize, integrated financial practices reduce transaction costs

and are associated with better relationship quality. How-

ever, for cohabiters, the associated costs of joint financial

practices in the event of dissolution may be greater than

with separate financial management systems reducing the

incentive to engage.

Financial Integration as a Relationship Constraint

of Current Cohabiters

According to Stanley and Markman (1992) the pooling of

finances to share expenses or combine assets constitute

commitments that constrain the relationship. Such con-

straints are linked to deeper interdependence in a rela-

tionship, they argued, and assist with transitions from one

relationship phase to the next. Constraints that have low

entry costs but high exit costs facilitate these transitions by

making it easier to stay together and more difficult to break

up once acquired. Stanley et al. (2010) believed that the

difference between cohabiters who marry and those who

remain cohabiting was the degree of risk and the willing-

ness to become increasingly constrained. Cohabiters can

either actively choose to commit (via marriage) or pas-

sively acquire constraints; the difference between the two

is in how much control they exert over the process (Stanley

et al. 2010). The distinction between active and passive

accumulation of constraints is associated with subsequent

relationship success.

A similar argument can be made for integrating finan-

ces, which requires the agreement of both partners.

Financial integration practices are constraints that are

purposely adopted because they involve active decisions

as opposed to sliding or passive acts. Matters of conve-

nience largely drive adoption of joint household financial

practices as a means to decrease transaction costs of

everyday living (Treas 1993). In addition, the sharing of

finances and joint money management practices require

some minimum threshold of couple-level communication

and consensus (Addo and Sassler 2010). The adoption of

financial integration practices within a cohabiting union

may reflect preparation for the transition to a more formal

union (Ashby and Burgoyne 2008). It may, however,

indicate a desire to engage in more cost and time efficient

practices formally associated with marriage without hav-

ing to marry.

Cohabiters may also selectively choose to adopt a par-

ticular practice based on its associated degree of autonomy.

They may desire to have something shared to help legit-

imize the union, but a lack of interest in bearing the legal

and social costs of marriage (Ashby and Burgoyne 2008).

Assuming the level of integration is defined by the per-

ceived costs incurred in the event of relationship dissolu-

tion, the risk of dissolution decreases as cohabiters form a

stronger interpersonal bond, or couple-level identity.

Couples accumulate more constraints over time, driving the

progression from individual to couple-level identity as

relationship duration lengthens. One qualitative study

found that even when cohabiting couples professed to

having independent management systems to preserve

autonomy, they still implemented practices that bordered

more closely to pooling with some degree of shared man-

agement (Evertsson and Nyman 2014). Tension may arise

between the appeal of structural constraints, such as an

integrated financial system that decreases transaction costs

and the desire to maintain an individual identity. A par-

ticular integration practice may be well suited to address

this issue. For example, cohabiters wanting to maintain

their autonomy may find credit cards appealing because

they offer the option of joining accounts while also main-

taining a separate personal account (Pahl 2008). It may also

be the case that young adult cohabiters who exhibit high

rates of relationship churning and a lower likelihood of

marriage may have shorter relationship horizons and prefer

short-term low-cost transactional arrangements. As a result,

practices associated with fewer and lower exit costs are

expected to be adopted more often and earlier in the

relationship.

86 J Fam Econ Iss (2017) 38:84–99

123

Couples today encounter a wider range of options about

whether and in what ways to use shared financial instru-

ments. Over the past thirty years, political changes have

made it illegal to discriminate against credit applicants

based on gender and marital status (Blakely 1981) and

expansions of the credit market in the United States have

increased the availability of financial products and options

for consumers (Dynan 2009). With two-earner households

and an increasing number of couples purchasing homes and

accumulating savings pre-nuptials (Schneider 2011),

interest in studying joint investments and resource alloca-

tion has grown. Exploring financial practice management

now involves examining relationships beyond marriage and

incorporating the diversity of financial options currently

available. Adding someone to a bank or credit account

requires a much lower entry cost (or fixed cost) than

applying for a mortgage together (Beverly et al. 2003).

Research also suggests that assets and debts are treated

differently within marriages, and debt or negative house-

hold assets increases risk of divorce (Dew 2007). Behav-

iors that individuals exhibit in one relationship can also

spill over into new unions undermining future relationship

success (Coleman et al. 2000).

Relatively little empirical attention has been paid to the

myriad ways financial integration exists within cohabiting

unions or its role in relationship progression. This is sur-

prising given that participation in shared living increases

the odds of adopting structural constraints independent of

the legal status of the relationship (Stanley and Markman

1992). The need versus the desire to integrate finances may

be tied to the living situation that cohabitation facilitates,

but it may also reflect the relationship dynamics exhibited

within the union.

Classifying Financial Integration Practices

of Current Cohabiters

Integrating finances differ according to their associated exit

costs and the degree of individual autonomy. Based on

these criteria financial integration practices are grouped

into three categories: necessitating, progressive, or invest-

ment, as outlined in Table 1. Integrating finances can stem

directly from the shared living arrangement. Necessitating

integration practices usually appear on the list of reasons

that make cohabiting more appealing than maintaining

separate residences (e.g., Sassler and Miller 2011). They

are inherently interdependent and require a reliance on a

partner to provide economic support and assist with

financial (and housing) stability. Participation is not tied to

increases in couple-level identity above and beyond the one

that was established when the cohabiters moved in toge-

ther. Necessitating practices are hypothesized to be asso-

ciated with the current socioeconomic status of cohabiters

(e.g., education, income, employment status). They are also

low-cost practices to adopt, in that the costs of the con-

straints are linked only to (short-term) residential expenses.

In the event of relationship dissolution, the associated costs

with necessitating practices of moving out of cohabitation

are low when compared with exiting a marriage. Potential

financial costs include, for example, remuneration for lea-

ses terminated early, the need to find a new place to live

and associated costs, and the cost of relocating items, as

well as the costs associated with setting up new utilities,

etc. at the new location. Then there are the non-financial

costs such as the stress associated with housing searches, or

associated with remaining in the abode while waiting for

the contract or lease to expire. It is hypothesized that

necessitating practices will be positively associated with

staying together as a cohabiting couple, since shared living

(and its resulting economies of scale) is incumbent on

participation in the practice.

Both the progressive and investment practices distin-

guish themselves from necessitating in that they are rep-

resentative of classic pooling practices. Engaging in

progressive practices of joint financial management allows

couples to learn more about each other’s finances and

financial behavior. They are defined by the ability to access

and control a partner’s finances, and consequently reflect

increased levels of trust. In doing so, couples also relin-

quish some autonomy by linking their short-term financial

fates. Decreased autonomy over one’s finances increases

the overall costs associated with participation and disen-

gagement. These traits and their connection to relationship

quality attributes such as trust lead to the hypothesis that

Table 1 Financial integration practice classification, measures, and hypotheses

Financial integration

practices

Exit costs Identity/individual

autonomy

Proxy measure Hypotheses

Necessitating Low Individual Shared expenses Cohabitation (?)

Progressive Medium to

high

Individual and couple Joint accounts: bank & credit

cards

Cohabitation (?)/marriage

(?)

Investment High Couple Homeownership Marriage(?)/dissolution (-)

J Fam Econ Iss (2017) 38:84–99 87

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cohabiters who engage in progressive practices are more

likely to remain together as cohabiters and increase their

probability of marriage.

Investment integration practices signal long-term

attachment and commitment. They consist of the acquisi-

tion of assets (like home ownership), and reflect the belief

that the practice will reap more than pecuniary benefits to

the partnership collectively. Cohabiters that engage in

investment practices are signaling publicly a couple-level

identity and investment in the future. Both entry and exit

costs are high, and exit costs grow with the level of

financial commitment. Because of these properties one

expects investment practices to be positively associated

with marriage relative to remaining as cohabiters or

separation.

The Role of Marital Intent

Stanley and Markman (1992) argued that informal coresi-

dence increased constraints prior to the establishment of an

emotional bond (which they termed ‘‘romantic commit-

ment’’) and the discussion of marital intentions. Sliding—

the unplanned gradual progression into shared living—has

been associated with what has been labeled the premarital

cohabitation effect (Manning and Smock 2005; Stanley et al.

2006) or the greater likelihood that marriages preceded by

cohabitation dissolve relative to direct marriages. Although

some qualitative research suggest that cohabiters rarely

discuss marital plans prior to moving in (Sassler 2004),

cohabiters who actively decide to move in together, with

expressed marital intent, are much more likely to marry and

stay married than cohabiters who move in without being

engaged and who subsequently marry (Brown 2000).

Therefore, marital intent becomes as important to the

adoption of a constraint as the decision to be constrained. For

some cohabiters, planning to marry and beginning the pro-

cess of financial integration practices serve as preparation

for the formal union (Ashby and Burgoyne 2008). If

cohabiting couples that plan to marry are more likely to

engage in similar behaviors as married couples do, then

marital intent could be driving the association between joint

financial practice and transitioning to marriage. This would

also mean that certain financial integration practices are not

constraints that increase the probability of marrying, but

rather works in tandem with preparation for marriage.

What we do know is that cohabiters are optimistic about

their current relationships; they tend to believe their rela-

tionships will last and transition into marriage (Brown

2000; Waller and McLanahan 2005). In general, those who

report being engaged or plan to marry at the time they

moved in with a partner are more likely to transition from

cohabitation to marriage (Brown and Booth 1996). For

those who do transition to a marital union, marital intent

may explain the adoption of joint financial practices,

especially progressive and investment, which are not nec-

essarily tied to coresidential living but embody relationship

attributes such as trust and long-term commitment. The

analysis will test the hypothesis that marital intent mediates

positive and significant associations between financial

integration practices and a marital outcome.

Additional relationship attributes that have been asso-

ciated with relationship commitment and transitioning to

marriage include having shared children in a cohabiting

household (Tach and Halpern-Meekin 2009), the length of

the cohabitation, and relationship quality. Couples that

report poorer relationship quality are less likely to combine

finances (Burgoyne and Morison 1997; Kenney 2006;

Oropesa and Landale 2005). Age at the start of the

cohabitation (Kuperberg 2014), previous cohabitation, and

a prior marriage (Gibson-Davis 2009) have all been asso-

ciated with relationship transitions among cohabiters.

Race/ethnicity, maternal education, parents’ marital status,

and a cohabiter’s birth to a teenage mother consistently

predict marriage and relationship dissolution of cohabiters.

Indicators of current socioeconomic status, such as edu-

cational attainment, post-secondary school enrollment,

employment status, and income should be associated with

the ability to engage in a financial practice and dictate

current relationship status (Sassler 2010).

Methods

Sample data were from two recent waves of the National

Longitudinal Survey of Youth 1979 Young Adult cohort

(NLSY79-YA). The NLSY79 is an ongoing nationally

representative cohort study of young adults who were

between the ages of 14 and 21 as of December 31, 1979. In

1986 a separate survey began following the biological

children of the NLSY79 women, and in 1994 an additional

questionnaire was created and administrated to these chil-

dren as they aged into adolescence and young adulthood.

Participants of NLSY79-YA are interviewed every 2 years,

and questioned on a variety of topics including employ-

ment, education, family, and relationships.

As of 2015, 11,512 children have been born to the

mothers of the NLSY79. Of those, 6305 had aged into the

young adult sample and were interviewed in 2008, and

5311 of these 6305 were interviewed again in 2010.4 There

were 860 current cohabiters in the 2008 sample, but only

711 were re-interviewed in 2010. At the time the survey

4 There was a 2012 wave of data, however, only 88 of the 340 still

cohabiting with their partner in 2010 were also interviewed in the

2012. Such high attrition makes incorporating this information into

the analysis prohibitive.

88 J Fam Econ Iss (2017) 38:84–99

123

was fielded same-sex marriage laws varied by state in the

US. Therefore, twenty respondents who reported being in

same-sex relationships were removed from the analysis.

The final sample consisted of 691 heterosexual young

adults who were cohabiting in 2008 and interviewed again

in 2010. Multiple imputation techniques were employed in

order to maintain maximum sample size and reduce the

influence of observations missing data. Multiple imputation

is the preferred method for dealing with missing data

because it is less likely to bias the sample and results

(Rubin 1996). Imputation models were generated using the

mi impute chained command in STATA 13, and standard

errors of the imputed estimates were corrected according to

Rubin’s combination rules, which account for both within

and between imputation variances (Rubin 2004).

Because 149 cohabiters were lost to attrition between

waves, sample selection could potentially bias the esti-

mated coefficients by inflating the transition outcomes of

the cohabiters (Sassler and McNally 2003). Logistic

regression models of cohabiter characteristics in 2008

indicated non-random attrition. Attritors were more likely

to be older (25–35 years old), have lived with their married

parents at 14, and previously married. The inverse of the

predicted probabilities from the attrition model were used

to re-weight the data for all estimations (Robins et al.

1994). The weighted sample was representative of children

born to women who were between 14 and 21 in 1979 and

currently cohabiting in 2008. Selecting the sample based on

relationship status, however, reduced its representative-

ness; as a result, the analytic sample included a high con-

centration of young adults with less than a high school

degree, an overrepresentation of Black and Hispanics, and

youth from relatively low socioeconomic backgrounds.

Therefore, the results should be interpreted as applicable to

this subgroup of young adult cohabiters.

Current cohabitation status was constructed from the

survey question that asked the respondent’s relationship

status in 2008. The relationship status of the cohabiter with

that same partner was then assessed in 2010 to create the

dependent variable for the multivariate analysis. The

cohabiter could have been in one of three current rela-

tionship status states: still living together as a cohabiting

couple, married to that same partner, or no longer together.

Financial integration practices were determined using

study questions asked only of current cohabiters or married

couples. Shared household expense participation was used

to determine that couples engaged in necessitating financial

integration practices. Respondents who reported sharing at

least some of the household expenses with their partner

were coded equal to one, zero otherwise. The analysis

contained two progressive financial integration practice

measures: holding a joint bank account and a joint credit

card account. Both financial practices include the ability to

access, withdraw, or deposit funds into a joint account.

They also offer additional incentives, such as a means to

build savings and acquire credit history (Xiao and Ander-

son 1997). Although the bulk of finances are still shared,

couples may employ alternative practices, such as main-

taining separate and joint accounts, which allow each

partner to maintain some financial autonomy (Ashby and

Burgoyne 2008). Bank accounts determined access to joint

assets, i.e., positive income and savings, and joint credit

card accounts reflected access to joint debt. It is also pos-

sible to accumulate debt in bank accounts (e.g., over-

drawing) and build up an asset (a higher credit score)

through good stewardship of a credit card account. Recent

studies suggest that the value of assets and debts lead to

differential outcomes within relationships. For example,

consumer debt was associated with marital distress, and

increased conflict and risk of divorce (Dew 2007, 2011).

Consumer debt and education loan debt was associated

with lower likelihood of transitioning to marriage among

young adults (Addo 2014; Dew and Price 2011), whereas

net wealth and financial assets were positively correlated

with movements into marriage (Addo 2014; Schneider

2011). There was no information distinguishing checking

and savings accounts, and the analysis did not differentiate

between types of credit cards (e.g., charge, store, etc.).

Respondents that reported buying a house together were

considered to engage in an investment financial integration

practice, with interviewers allowed to clarify whether the

respondent had a joint mortgage on a house with their

current partner. For most US households, homeownership

is considered an expensive long-term investment (Rohe

and Watson 2007); it has also been found to increase the

odds that low-income cohabiters with children wed (Gib-

son-Davis 2009). According to the US Census in 2007, the

homeownership rate for 24–29 year olds was 40.6 %.

Among low-income families with children, homeowner-

ship rates were around 35 % (Gibson-Davis 2009). Entry

costs for homeownership are high, requiring financial

transparency and proof of employment, steady income, and

good credit histories. Steady employment with stable in-

come is inherent in the ability to pay one’s mortgage. The

financial integration prediction and relationship transition

models included additional controls for demographic and

family background, current socioeconomic status, and

relationship characteristics linked to cohabiters’ relation-

ship transitions and household resource allocation deci-

sions. Respondent’s gender and race (non-Hispanic Black,

Hispanic, and non-Hispanic White) were assessed from

their first young adult interview. Family background

characteristics consisted of maternal education and the

marital status of the mother both at age 14 of the young

adult. Education variables included highest degree com-

pleted and whether the cohabiter was currently enrolled in

J Fam Econ Iss (2017) 38:84–99 89

123

a post-secondary school or program at the time of the 2008

interview. Labor market controls include an employment

dummy for paid work since the young adult’s last interview

and logged income from the previous year. These same

characteristics were provided for the cohabiter’s partner.

Also included was whether there were any other adults

living in the household with the cohabiters. Relationship

history was captured with whether the cohabiter previously

cohabited with someone else (Brown 2003) or had a prior

marriage (Burgoyne and Morison 1997), as well as if their

partner was previously married, and if the partner had a

child in the household that’s not the respondent’s child.

Current relationship covariates included presence of shared

children in the household (Brown, 2003; Waller and

McLanahan 2005) and current length of cohabitation in

years (Brown, 2003; Sassler et al. 2010). Relationship

quality was measured from the survey question: ‘‘Would

you say your current relationship is very happy, fairly

happy, not too happy?’’ and the marital expectations vari-

able was based on the question: ‘‘Do you and your partner

have definite plans to get married?’’ Very happy responses

and definite plans to marry were coded as one, and zero

otherwise.

The results section is divided into a two-part analysis.

The first analysis characterizes financial integration prac-

tices using summary statistics including an examination of

their relationships with the respondent’s background, cur-

rent socioeconomic and relationship attributes. The second

analysis uses multinomial logistic models to assess the

relationship between the cohabiter’s relationship status in

2010- still cohabiting, married, or separated—given their

financial integration practices in 2008. All tables report

average marginal effects, which evaluate the average

contribution to the outcome for a given change in the

variable of interest when evaluated at the sample mean.

Results

Descriptive Statistics

Table 2 summarizes the descriptive characteristics of the

analytic sample. Non-Hispanic Blacks and Hispanics were

over represented in this sample of young adult current

cohabiters, composing approximately 53 % of the full

sample. About 12 % of the young adults were born to

mothers 20 years old or younger, and just over 15 % had

mothers who had not earned a high school diploma. Low

educational attainment reflects the relative youth of the

sample (the average age was 21); the largest share, 43 %,

had less than a high school, while an additional 34 % had

received their high school diploma. Approximately 14 %

were currently enrolled in a post-secondary school or

program at the time of the 2008 interview. Nearly the entire

sample (94.5 %) reported being currently employed, with

average wages of $18,000 in 2007 dollars. Partners of the

respondents were also employed, but to a lesser extent,

(79.3 %) and made comparable average salaries.

The young sample already exhibited high rates of rela-

tionship churning. Almost 20 % reported previously

cohabiting and 2.4 % had a prior marriage compared with

7.8 % of their partners. An advantage of this dataset is that

this sample includes cohabiters both with and without

children. Just over half of the sample had young children

living with them (not shown), and 33 % reported that at

least one child was also the biological child of their current

Table 2 Descriptive statistics of current cohabitors (N = 691)

Mean SD

Demographic/family background characteristics of young adult

Female 0.640 0.031

Non-hispanic White 0.470 0.035

Hispanic 0.263 0.029

Non-hispanic Black 0.267 0.033

Mother age 20 or younger at birth 0.116 0.017

Mother married at age 14 0.411 0.035

Mother has less than high school degree at age 14 0.153 0.023

Socioeconomic status characteristics

Less than high school degree 0.432 0.037

Some college 0.193 0.022

College graduate or more 0.028 0.005

Currently enrolled 0.208 0.030

Currently employed full-time 0.945 0.020

Income (ln) 8.099 0.216

Partner-currently working 0.794 0.037

Partner income (logged) 8.023 0.376

Other people in the household 0.360 0.037

Relationship characteristics

Age at start of cohabitation 20.280 0.197

Previous cohabitation 0.190 0.026

Previous marriage 0.024 0.005

Partner-previously married 0.079 0.019

Shared children in household 0.333 0.038

Partner’s child in household 0.051 0.016

Cohabitation length (in years) 1.213 0.108

Definitely marry 0.687 0.035

Relationship quality-very happy 0.722 0.035

Relationship status by 2010 interview

Still cohabiting 0.492 0.500

Married 0.166 0.372

Separated 0.342 0.475

Sample data from NLSY79 Young Adult current cohabiters in 2008

and reinterviewed in 2010. Weighted estimates to account for non-

random sample attrition

90 J Fam Econ Iss (2017) 38:84–99

123

partner, whereas only 5.1 % reported living with partners

who were parents to a child that was not their own.

Cohabiters reported being fairly happy with their rela-

tionships with 72.2 % stating that they were very happy.

Almost all (94.3 %) of the cohabiters were optimistic about

the relationship and reported plans to stay in their current

relationship, and close to 70 % of the sample reported

intentions to marry their current partner. As of the 2010

follow-up interview, 49.2 % of the cohabiters were still

cohabiting with the same partner, 16.6 % had married, and

34.2 % were no longer together.

Adoption and Determinants of the Financial

Integration Practices of Current Cohabiters

Table 3 displays the mean financial integration practice

measures for the full sample organized by final relationship

status. The prevalence of necessitating, progressive, and

investment strategies varied across cohabiters. Sharing

household expenses (necessitating) was most common,

with close to 90 % participation. And yet, there were still

11.5 % of the cohabiting sample that reported they did not

share expenses with their partner. For this small group,

cohabitation did not necessarily entail this particular

financial integration practice. There was little variation

across relationship outcomes; the participation rate for

cohabiters who married was 91.6 % and for those eventu-

ally separated was 89.0 %.

Progressive integration practices were far less preva-

lent than necessitating practices. Just under one fifth of

the sample reported holding joint bank accounts with

their current partners, with close to 10 % sharing credit

card accounts. The largest share holding both accounts

were those who eventually married. Not surprisingly,

separate banking accounts were the most common joint

management system. For both bank and credit card

accounts, the percentage of respondents who reported

having none was larger than the percentage who reported

holding a separate account and a joint account with their

partner, an additional indication of their current rela-

tionship status and the disadvantaged nature of the sam-

ple. Cohabiters who married held both joint and separate

accounts in greater percentages than those who continued

to cohabit or separated; they were also underrepresented

in the unbanked and no credit card accounts categories.

Home ownership or holding a joint mortgage was

reported by 13.3 % of the full sample. Approximately

30 % of the cohabiters who eventually married indicated

some form of shared homeownership, which was more

than twice the amount of those who continued to cohabit

or eventually separated.

The second panel of Table 3 lists the mean adoption

rates of the practices in combination. The average number

of financial practices was highest among those who mar-

ried (1.765). Financial practices were adopted in order of

increasing risk or associated costs of dissolution, consistent

with what was hypothesized. And, if cohabiters engaged in

only one integration practice it was shared household

expenses, the practice associated with the living arrange-

ment, lowest exit costs, and greatest individual autonomy.

There was only about 1.1 % of the sample that solely

practiced either joint bank accounts or joint credit card

accounts, and none of the cohabiters shared only home-

ownership. Among those cohabiters who reported sharing

only two practices, they were most likely to combine a

necessitating practice with a progressive, joint bank

account, or investment practice. Qualitative evidence that

joint accounts ensure that partners contribute their share to

household expenses supports this finding (Burgoyne et al.

2007). Not only were joint credit card accounts least likely

to be adopted, they were also least likely to be combined

with necessitating or investment integration practices.

Logistic regression models were used to analyze the pre-

dictors of each financial integration practice (Table 4). Model

estimates indicated that the only significant predictors of

shared expenses were the partner’s income, having shared

biological children in the household, and cohabitation dura-

tion. None of the family background, demographic, relation-

ship quality, or marital expectation estimates reached

conventional levels of significance. These results were in line

with the definition of necessitating practice; adoption and

continued engagement relies heavily on the current financial

situation. While current income status and educational

attainment were not associated with either of the progressive

integration practices, a few demographic characteristics were

related to participation. Female cohabiters sampled reported

being less likely to share bank accounts with their current

partner than male respondents and having married parents at

age 14 positively predicted engagement. Living in a house-

hold with other adults also decreased the probability of a

shared bank accounts (p\ 0.05) and credit card accounts (p\ 0.01). Reporting marital intent had positive associations with joint bank accounts and joint credit card accounts.

Enrollment in a post-secondary school or program deterred

participation in a shared mortgage as did the presence of other

adults in the household, and the respondent’s income was

positively associated with shared ownership. Cohabiters who

expressed definite plans to marry were 14 % more likely to

share homeownership. Comparing across the three financial

integration levels, definite patterns emerge that were in line

with their associated costs and autonomy attributes. For

example, as exit costs grew marital intentions became

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Table 3 Financial Integration Practices in 2008, by relationship status in 2010

Full Sample Still Cohabiting Married Dissolution

Mean Std. Err. Mean Std. Err. Mean Std. Err. Mean Std. Err.

Panel A

Necessitating financial integration practice

Share household expenses

Yes 0.885 0.029 0.873 0.045 0.916 0.042 0.890 0.035

No 0.115 0.029 0.127 0.045 0.084 0.042 0.110 0.035

Progressive financial integration practices

Shared bank account

Yes 0.161 0.024 0.152 0.033 0.309 0.066 0.122 0.033a,b

No 0.839 0.024 0.848 0.033 0.691 0.066 0.878 0.033a,b

Only joint 0.111 0.021 0.095 0.028 0.183 0.060 0.106 0.029

Joint and separate 0.050 0.012 0.056 0.019 0.126 0.042 0.016 0.012b

Only Separate 0.561 0.035 0.539 0.055 0.589 0.073 0.581 0.059

No joint, no separate 0.278 0.035 0.309 0.056 0.102 0.056 0.297 0.054a,b

Shared credit card account

Yes 0.096 0.019 0.058 0.022 0.220 0.064 0.105 0.031a

No 0.904 0.019 0.942 0.022 0.780 0.064 0.895 0.031a

Only joint 0.040 0.013 0.019 0.013 0.133 0.057 0.036 0.016a,b

Joint and separate 0.056 0.014 0.038 0.017 0.088 0.039 0.069 0.027

Only separate 0.462 0.034 0.465 0.053 0.548 0.075 0.429 0.055

No joint, no separate 0.441 0.038 0.477 0.055 0.232 0.069 0.466 0.058a,b

Investment financial integration practice

Shared homeownership/mortgage

Yes 0.133 0.022 0.108 0.028 0.299 0.077 0.107 0.032a,b

No 0.867 0.022 0.892 0.028 0.701 0.077 0.893 0.032a,b

Panel B

Combination of financial integration practices

Number of shared financial practices (0–4) 1.274 0.065 1.190 0.088 1.744 0.156 1.224 0.081a,b

None 0.100 0.026 0.116 0.041 0.029 0.016 0.104 0.034

Only shared expenses 0.624 0.036 0.660 0.054 0.421 0.077 0.646 0.053a,b

Only joint bank account 0.004 0.003 0.008 0.005 0.000 0.000 0.002 0.005

Only joint credit account 0.006 0.005 0.000 0.000 0.035 0.035 0.004 0.004

Only shared homeownership – – – – – – – –

Expenses and bank account 0.070 0.013 0.066 0.018 0.123 0.042 0.057 0.021

Banking and credit card 0.002 0.003 0.004 0.006 – – – –

Expenses and credit card 0.031 0.010 0.011 0.005 0.061 0.032 0.047 0.023a

Banking and housing 0.003 0.003 – – 0.019 0.019 – –

Expenses and housing 0.075 0.016 0.059 0.021 0.137 0.064 0.074 0.027

Credit card and housing – – – – – – – –

Expenses, bank, and credit 0.030 0.011 0.027 0.019 0.031 0.015 0.033 0.015

Expenses, bank, and housing 0.028 0.009 0.034 0.015 0.049 0.027 0.013 0.007

Expenses, credit card, and housing 0.003 0.002 0.002 0.002 0.007 0.008 0.002 0.004

Bank, credit, and housing – – – – – – – –

All four practices 0.024 0.010 0.013 0.008 0.086 0.051 0.018 0.017a

Observations NLSY-YA analytic sample N = 691; Last column denotes significant difference in group means (p\ 0.05) a Still cohabiting/marry b Marry/dissolved c Still cohabiting/dissolved. Weighted estimates to account for non-random sample attrition

92 J Fam Econ Iss (2017) 38:84–99

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Table 4 Logistic regression models of financial integration practices

Financial Integration Practices

Necessitating Progressive Investment

Variables Shared

expenses

Joint bank

account

Joint credit

card account

Shared

mortgage

ME ME ME ME

Demographic and family background characteristics

Female -0.002

(0.050)

-0.127**

(0.040)

0.007

(0.033)

0.004

(0.045)

Hispanic -0.025

(0.050)

-0.014

(0.046)

0.019

(0.040)

-0.134**

(0.049)

Non-Hispanic Black -0.005

(0.050)

-0.026

(0.048)

-0.074

(0.045)

-0.041

(0.046)

Mother age 20 or younger at birth 0.004

(0.068)

0.060

(0.045)

-0.039

(0.049)

0.082

(0.054)

Parents married at age 14 -0.003

(0.044)

0.077*

(0.038)

-0.025

(0.033)

0.024

(0.036)

Mother has less than hs degree -0.005

(0.051)

-0.069

(0.071)

-0.010

(0.045)

-0.017

(0.060)

Socioeconomic Characteristics

Less than high school degree (ref: high school degree) 0.046

(0.053)

-0.034

(0.049)

-0.025

(0.042)

-0.063

(0.046)

Some college 0.025

(0.045)

0.069

(0.048)

0.002

(0.040)

-0.060

(0.046)

Bachelors or more 0.117

(0.084)

0.011

(0.070)

0.060

(0.041)

0.016

(0.061)

Currently enrolled -0.031

(0.057)

-0.108

(0.072)

-0.037

(0.043)

-0.150?

(0.075)

Currently employed full-time -0.028

(0.105)

-0.138

(0.088)

0.070

(0.115)

-0.010

(0.113)

Income (ln) 0.012

(0.008)

0.005

(0.008)

-0.009

(0.007)

0.005

(0.010)

Partner’s working full-time -0.028

(0.059)

0.057

(0.100)

-0.043

(0.090)

0.050

(0.061)

Partner’s Income (ln) 0.016*

(0.008)

0.007

(0.012)

0.015

(0.011)

0.001

(0.008)

Other adults in the household -0.052

(0.045)

-0.092?

(0.052)

-0.146**

(0.044)

-0.112?

(0.061)

Relationship characteristics

Age at start of cohabitation 0.007

(0.012)

-0.008

(0.010)

0.006

(0.009)

-0.008

(0.016)

Prior cohabitation -0.027

(0.044)

-0.004

(0.050)

-0.075?

(0.040)

-0.045

(0.054)

Previously married 0.000

(0.082)

-0.030

(0.081)

-0.083

(0.071)

-0.010

(0.057)

Partner previously married -0.022

(0.078)

0.008

(0.096)

0.074

(0.052)

-0.002

(0.078)

Shared children in household -0.104*

(0.055)

-0.037

(0.055)

-0.044

(0.035)

-0.006

(0.042)

J Fam Econ Iss (2017) 38:84–99 93

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increasingly significant. With the exception of marital intent,

relationship attributes including having a marital history and

the quality, surprisingly, were not significant predictors across

all joint integration practices, whether it was sharing expenses

or pooling income or resources.

Financial Integration Practices and Relationship

Outcomes

Table 5 presents the results from the multinomial logistic

models of relationship status in 2010 on financial integra-

tion practices in 2008, net of demographic, socioeconomic,

and relationship history controls. The estimates in Table 5

list the predicted probability of transitioning to either

marriage or dissolution relative to remaining together as a

cohabiting couple with that same partner. Statistically

significant (p\ 0.05) estimates between marriage and dissolution are also underlined. Because the estimated

average marginal effects of the additional covariates are

consistent across all five models and the empirical and

analytical focus is on the relationship between the financial

integration practices and relationship outcomes, the

covariate results have been omitted from the tables (avail-

able upon request). Models indicated that over the two year

period compared to non-Hispanic Whites, Hispanic

cohabiters were more likely to stay together as cohabiters

relative to separating. Compared to high school graduates,

cohabiters without a high school degree were less likely to

marry and being enrolled in a post-secondary institution

increased separation relative to staying together as cohab-

iters. A history of cohabitation increased the likelihood of

separation as did having a partner that was previously

married. Both positive relationship quality and marital

intent were strong predictors of marriage. Reporting that

one was very happy in their relationship was negatively

associated with a subsequent dissolution. Current cohab-

iters who reported definite plans to marry were 14 % more

likely to transition to marriage over the study period.

Panel A of Table 5 presents results when each practice

was entered separately into the full model. As shown in

Table 3, the integration practices, especially progressive

and investment, were highly correlated. Including all four

practices in the same model decreased the ability to isolate

the relationship of a specific financial integration practice

on a relationship outcome. Both panels, A and B, consist of

results from two models. Model 1 indicates the direct effect

of the financial integration practice on subsequent rela-

tionship outcome, and Model 2 presents the results when

marital intent is added as a potential mediator.

Contrary to what was hypothesized, sharing household

expenses did not initially appear to be significantly asso-

ciated with relationship status. Differences emerged when

comparing the results for the progressive practices. Pro-

gressive practices increased the likelihood of transitioning

from cohabitation into marriage. A joint bank account

increased the likelihood of marriage by 8.2 % (p\ 0.05) while joint credit card accounts were associated with a

9.8 % (p\ 0.05) increase relative to remaining together as a cohabiting couple. The underlined average marginal

effects for joint credit card holders indicate that these

cohabiters were also more likely to break up with their

partners than they were to marry (p\ 0.05). This provides additional evidence that for some cohabiters a credit card’s

associations with debt may be negatively associated with

relationship success (Dew 2007). Joint homeownership as

an investment practice was associated with an 11.1 %

increase in the probability of a marital transition from

cohabitation.

Table 4 continued

Financial Integration Practices

Necessitating Progressive Investment

Variables Shared

expenses

Joint bank

account

Joint credit

card account

Shared

mortgage

ME ME ME ME

Partner’s non-bio child in household 0.159

(0.117)

-0.184

(0.110)

-0.068

(0.079)

-0.224?

(0.118)

Cohabitation duration: 1–3 years (ref: less than a year) 0.036*

(0.018)

0.015

(0.014)

0.001

(0.013)

-0.007

(0.016)

Relationship quality 0.024

(0.042)

0.028

(0.045)

0.000

(0.038)

0.045

(0.050)

Definite plans to marry 0.054

(0.042)

0.098*

(0.048)

0.118**

(0.040)

0.140**

(0.049)

Sample data from NLSY79 Young Adult Survy (N = 691). Average marginal effects reported; standard errors in brackets

*** p\ 0.001, ** p\ 0.01, * p\ 0.05, ? p\ 0.1. Weighted estimates to account for non-random sample attrition

94 J Fam Econ Iss (2017) 38:84–99

123

All of these relationships became more pronounced

within the mediation results reported in Column 2. There

were noticeable decreases in the average marginal effects

predicting transitions into marriage, and an increase in the

magnitude and significance of joint credit card ownership

and its relationship to dissolution of the relationship. The

bootstrap test on the mean mediated relationship (Preacher

and Hayes 2008) indicated that marital intent completely

mediated the relationship between engaging in progressive

practices and transitioning to marriage. It did not, however,

fully explain the strong association between having a shared

mortgage and marriage. Results suggest that financial

integration practices that have high exit costs and very low

individual autonomy such as investment practices embod-

ied the constraint commitment definition best. Joint home-

ownership remained positively and significantly associated

with a marital transition, independent of marital intentions.

Marital intent also appeared to suppress the relationship

between holding a joint credit card and relationship dis-

solution. Similar to the results from Model 1, the under-

lined marginal effects indicate that after controlling for

intent, cohabiters who held joint credit card accounts with

their partners had an increased probability of dissolution

relative to staying together and marrying. Couples who

adopted progressive practices tied to negative financial

behaviors or financial instability and who had no intent to

formalize their unions were more likely to separate.

Finally, the results in Panel B reveal a bit more about the

types of cohabiters that practiced particular financial

integration types. Cohabiters that engaged only in shared

experiences were less likely to marry; a relationship that

remained strong, independent of expressed marital intent.

This suggests that cohabiters who only engage in necessi-

tating practices may be committed, or constrained, to their

coresidential living arrangement. The probability of mar-

riage increased as more constraints were put in place, with

the number of financial practices positively associated with

transitioning into marriage as compared to non-marital

cohabiting and separation. Similar to joint homeownership,

marital intent was only able to partially mediate the

relationship.

Conclusion and Discussion

For young adults who believe they need to be financially

stable and economically secure in order to marry, cohabi-

tation is a more attractive, less expensive coresidential

option. The predominant view is that marital dissolution is

more costly than ending a cohabiting union because the

former has more constraints to disentangle. Stanley et al.

(2010; p. 245) wrote, ‘‘Commitment can be considered an

act of choosing to be increasingly constrained because of

the desire to persist, exclusively on the chosen path.’’

While not all cohabiters marry, there are mechanisms

through which they may decide to reinforce their com-

mitment to each other and the couple. Recent evidence

suggests that the economic costs of cohabitation

Table 5 Financial integration practices in 2008 on relationship status in 2010

Variable Model 1 Model 2

Married versus still cohabiting Separated Married versus still cohabiting Separated

Panel A: Financial integration practices entered in separate regressions

Shared expenses -0.007

(0.059)

0.110

(0.090)

-0.018

(0.059)

0.112

(0.090)

Joint bank account 0.082*

(0.038)

-0.070

(0.076)

0.063?

(0.037)

-0.066

(0.078)

Joint credit card account 0.098*

(0.046)

0.141

(0.086)

0.066

(0.045)

0.155?

(0.090)

Shared mortgage 0.111**

(0.040)

-0.023

(0.088)

0.080*

(0.039)

-0.007

(0.092)

Panel B: Select combinations of financial practices

Only shared expenses -0.084**

(0.031)

0.017 -0.064*

(0.030)

0.010

(0.062)

Number of financial practices 0.054**

(0.017)

(0.039) 0.040*

(0.017)

0.027

(0.041)

Sample data from NLSY79 Young Adult Survey (N = 691). Model 1 without marital intent; Model 2-mediation model with martial intent;

average marginal effects reported; standard errors in brackets; All models contain demographic, family background, socioeconomic, and

relationship controls listed in models from Table 1. Weighted estimates to account for non-random sample attrition

*** p\ 0.001, ** p\ 0.01, * p\ 0.05, ? p\ 0.1

J Fam Econ Iss (2017) 38:84–99 95

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dissolution are increasing for women in particular. Avellar

and Smock (2005) found that post-separation former

cohabiting women fared worse, experiencing lower income

and higher poverty rates. Tach and Eads (2015) showed

that income losses to formerly cohabiting mothers were

similar to those of divorced women. This study examined

whether the costs of cohabitation has increased as a result

of the increase in financial constraints young adult cohab-

iters have chosen to adopt within their unions, and whether

these risk-pooling activities were associated with subse-

quent relationship transitions and marital intentions.

The central finding of this paper was that young adult

cohabiters were not only sharing expenses, but that they

were also intertwining their credit histories and bank

accounts and acquiring assets, like buying a house together.

Shared homeownership, however, was adopted only in

combination with the other household practices of financial

integration. Descriptive statistics suggested that integration

practices were adopted in order of increasing exit costs.

That such a high percentage of cohabiters shared household

expenses is not surprising given its relation to the resi-

dential situation; it is also consistent with findings of pre-

vious studies (Treas and De Ruijter 2008; Kenney 2004).

Joint bank account ownership appears to be necessary in

order for the other integration practices to occur, and is

reflective of its use as a means to accomplish the other

medium to high cost practices of shared credit card

accounts and shared mortgages (Ashby and Burgoyne

2008). This is not completely unexpected given joint bank

accounts tend to be the primary money management tool

for couples that have them (Addo and Sassler 2010; Treas

1993). They may also be a means for cohabiters to handle

risk in the relationship. Given that cohabitation does not

confer the same legal protections in the event of dissolution

as marriage does, joint bank accounts expose couples in

financial vulnerable positions. They can serve primarily as

an insurance mechanism to protect individual assets during

the relationship, as each individual has access to his or her

partner’s money to pay joint bills on shared expenses.

Joining finances becomes a means of reducing uncertainty

surrounding ones financial and relationship status (Romo

2014).

The second main finding concerns subsequent relation-

ship transitions and marital intent as they are related to the

financial integration practices. The analyses found that

practices with medium to high exit costs and those that

displayed couple level identity were more likely to be

associated with a subsequent union transition. Specifically,

sharing mortgages were associated with an increased

likelihood of marriage, whereas joint credit card accounts

increased the odds of dissolution. Relatedly, marital intent

was positively associated with a marital transition and

cohabiters with an intent to marry were much more likely

to start integrating their finances prior to marriage. Some

studies suggest that marital intent is less likely to translate

into marital unions for low-income couples and young

adults born from socio-economic disadvantage (Gibson-

Davis et al. 2005; Gibson-Davis, 2009). While shared

mortgage was associated with an increased likelihood of

marriage, marital intent did not fully explain why those

who shared homeownership were also more likely to

marry. This suggests that for cohabiting populations who

are more likely to be disadvantaged, intendedness is not be

enough to predict a future marriage, but rather evidence of

significant financial investment could be. These findings

are in line with previous research on low-income samples

of cohabiting couples with children, indicating increased

likelihood of marriage among cohabiting homeowners

(Gibson-Davis 2009). If homeownership requires savings

for a down payment and steady income to pay the mort-

gage, marriages resulting from premarital cohabitation

should increasingly consist of financially secure and

stable young adults. In addition, the study findings suggest

that cohabiting couples who subsequently marry may have

a head start on asset acquisition, and explain some of the

wealth advantage married couples who cohabited first have

over those who directly married (see Painter and Vespa

2012 for more details).

Integration of finances in cohabitation may also weed

out incompatible matches. This appears to be true with

pooling of economic resources such as consumer debt.

Cohabiters who held joint credit card accounts with their

partners had an increased risk of union dissolution.

Therefore, a potential unintended consequence of adopting

certain marital behaviors pre-nuptials, such as integration

of finances, is to decrease the negative selection of couples

that slide into marriage because of the constraint commit-

ments of cohabitation. Given the low levels of participation

as compared to the other practices, sharing credit card

accounts may be considered the structural constraint with

the greatest perceived exit costs. This is not surprising,

given the structure of the credit card market. Problems with

paying bills and overdue accounts can negatively affect

one’s credit report, which influences one’s future borrow-

ing chances for years. And while shared household

expenses was not predictive of union transitions, those

current cohabiters who only shared expenses were more

likely to stay together as cohabiters rather than marry. This

could be an indication that certain financial integration

practices, the ones involving short term and limited trans-

actions, have been decoupled from marriage and contribute

to the stability of those unions.

One of the unique features of the progressive financial

integration practices is the ability to hold both a joint

account and a separate account. Supplementary analyses

disaggregating the bank and credit card account

96 J Fam Econ Iss (2017) 38:84–99

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ownerships explored whether cohabiters who practiced

both collective and individualist progressive practices were

more likely to remain together, eschewing marriage or

subsequently separating. There was evidence that com-

pared to only holding joint bank accounts, maintaining both

separate and joint bank accounts was associated with

remaining together as a cohabiting couple relative to sep-

arating. With respect to only holding joint credit card

accounts, maintaining only a separate account was asso-

ciated with staying together as cohabiters rather than

transitioning to marriage; an indication that cohabiters who

want to stay cohabiters should not attempt to integrate all

forms of finances, especially those connected with debt or

that carry stigmatizing effects. Cohabiters with no credit

card accounts, joint or separate, were less likely to marry

relative to cohabiting and more likely to separate than

marry. For some, cohabitations are increasingly becoming

similar to some marriages in which the central role of joint

financial practices and the integration of resources have

decreased (Lauer and Yodanis 2011).

This study is not without limitations. Given the study

design, causal claims are outside the realm of this analysis

and omitted variable bias remains a concern. There may be

unobservable attributes related to shared homeownership

that also influence transitioning to marriage. The panel

nature of the data, however, does increase confidence in the

results based on the temporal ordering of the financial

practices and the relationship statuses. It is also difficult to

ascertain whether decisions on the pooling finances were

made contemporaneously with future relationship decisions.

Therefore, it is possible that observed relationship behavior

mirrored plans on the part of a select sample of couples. If

this were true, then we would expect the findings to be

upwardly biased. Another limitation is the representative-

ness of the sample. Of note is that the analytic sample is

necessarily selected on cohabiters that were already in

lasting relationships. Many cohabiting relationships of

recent cohorts of young adults are short-term ending in

dissolution (Guzzo 2014). Study results are more likely to be

biased towards the relationship behaviors of young adults in

either lasting relationships or recently formed relationships

closest to the 2008 interview date (Hayford and Morgan

2008). In addition, the sample data were relatively disad-

vantaged limiting the generalizability of the findings to all

young adult cohabiters. Ten percent of respondents were

born to mothers who had not completed high school and a

significant proportion had less than a high school degree at

baseline. The number of homeowners (19.8 %) is also low

when compared to national averages (34.3 %). It is, how-

ever, important to note that the study period, 2008–2010,

coincided with the Great Recession (2008–2009), during

which low-income homeowners experienced some of the

highest mortgage default and foreclosure rates in US history.

Although this analytic sample was not nationally represen-

tative, the NLSY79-YA study is currently the only dataset

that contains both questions related to the within household

financial behaviors of young adults and longitudinal rela-

tionship information.

Despite these limitations, examining financial integra-

tion practices can have important implications for how

researchers distinguish among the diverse groups com-

prising current cohabiters. When it comes to integrating

finances, some constraints are necessary for coresidential

living, like sharing household expenses. Progressive prac-

tices can assist with short-term transactions at the same

time weed out the precursors to marriage from the alter-

natives to single and married cohabiters, and investing into

the long-term financial integration matters for transitioning

into a marital union. Delineating low versus high exit costs,

associated autonomy, and short-term versus long-term

structural constraint commitments may be more important

for relationship transitioning than active versus passive

adoption, or sliding versus deciding. In addition to

expanding the analysis to multiple periods and including a

larger and more national representative sample of current

cohabiters, future studies should use couple-level data to

address issues of concordance on financial behaviors and

control for socioeconomic and relationship homogamy.

Future research should also investigate the roles of power

and dependency, as played out in cohabiting union by the

explicit practices they choose to adopt as qualitative studies

find that joint accounts are still controlled by one partner,

and in married couples it is more likely to be the female

partner (Burgoyne et al. 2006).

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http://dx.doi.org/10.1023/A:1024991304216
http://dx.doi.org/10.1023/A:1024991304216
Financial Integration and Relationship Transitions of Young Adult Cohabiters
Abstract
Introduction
Collectivized Systems of Money Management in Marriage and Cohabitation
Financial Integration as a Relationship Constraint of Current Cohabiters
Classifying Financial Integration Practices of Current Cohabiters
The Role of Marital Intent
Methods
Results
Descriptive Statistics
Adoption and Determinants of the Financial Integration Practices of Current Cohabiters
Financial Integration Practices and Relationship Outcomes
Conclusion and Discussion
References