Everyone who has gone through an awkward phase has heard the old refrain, “It’s what on the inside that counts.” Sage advice, but it might need a cynical addendum: “It’s what’s in the inside of your wallet that counts.”
That’s if you ask more than a third of Americans, who say they value financial compatibility more than physical or intellectual compatibility, per Northwestern Mutual's latest wave of its 2023 Planning & Progress Study, which surveyed more than 2,700 people. Aligning on money is all the more pressing for younger generations, who are earlier on in their relationships and careers—nearly half (49%) of Gen Zers view financial compatibility as more important than physical compatibility. That’s compared to 40% of millennials, 35% of Gen Xers, and 30% of baby boomers.
It’s more complicated than just searching for good looks or riches; it’s a sign of younger generations' economic experiences. Finances have long been a stressor for couples, from sharing a bank account to negotiating housework around who is the primary breadwinner to just spending in general. But it becomes all the more urgent when people feel financially insecure. While data indicates a strong economy, many Americans are still reeling from inflation, layoff and recession fears, socioeconomic turmoil, and the pandemic.
It arguably feels even more poignant for younger generations, thanks to the economy they grew up in and their current life stage. After struggling to build wealth thanks to two ill-timed recessions before the age of 40 and outsize student loans, millennials are entering high-spending years as they look to settle down in their first home or even start a family. Gen Zers have watched millennials grapple with these economic challenges, all while dealing with their own fair share. And given their entry-level salaries and lack of time to build wealth, they’re in the standard economically vulnerable position of a twentysomething.
It follows then, that they're learning to discuss money habits with their partners early on. Thirty-two percent of Gen Zers report to Northwestern Mutual that money conversations should take place even before a relationship gets serious, a number that climbs to 40% for millennials.
"Generational wealth conversations are happening earlier and more often than ever, and because of it, younger generations are learning more about their parents' financial compatibility and habits—both good and bad,” Veronica Fuentes, CFP, Northwestern Mutual managing director, tells Fortune, indicating that they're looking to their parents' relationships around money.
It’s likely that watching their parents navigate finances as a single adult amid economic crises like the Great Recession or the pandemic shaped younger generations’ attitude towards talking to their partner about money—especially since divorce became more common as zoomers and millennials grew up; spats about finances have even put pressure on boomers who have later-in-life divorces.
Yet older couples are more likely to report seeing “eye to eye” with their partners regarding their financial approach. Northwestern Mutual found that financial strains tend to become less common the older respondents get—an issue that the report authors credit to creating more wealth and making goals together over time. Boomers are 25 percentage points less likely to say money is a “significant issue in their relationship” than millennials are.
"When it comes to financial anxiety, younger generations are facing multiple pressures. They are more vulnerable to economic downturns, they have had less time to prepare for volatility, and they may not have faced financial challenges as a couple,” Fuentes says. “Meanwhile, older couples may have faced, planned for, and persevered through periods of financial uncertainty multiple times.”
Looks fade, after all. Money might too, but it also might accumulate if you have the same financial outlook.
