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Family Matters No. 29 - August 1991

Controlling the purse strings

Helen Glezer and Eva Mills


How are couples managing their finances and how are they coping with the economic situation in Australia? Authors report on some findings from the Institute of Family Studies' Family Formation Project.

How are couples managing their finances and how are they coping with the economic situation in Australia? Helen Glezer, AIFS Fellow, and Eva Mills, AIFS Research Assistant, report on some findings from the Institute's Australian Family Formation Project.

A Tough Time Of It

Families in the Australian Family Formation Project describe what are the greatest pressures they face

'We have only had our own business for two years and find financial difficulties due to the high bank repayments. Work long hours - particularly my husband, which is why household duties are not shared as much as they were in the past.'

'Even if I have full-time employment finding the money for general upkeep and repairs to the home will be difficult on one income. It seems everything is geared to two incomes these days.'

'At present it's very hard to support a family on one wage, and there doesn't seem to be much chance of owning a home in the present situation or in the future'.

'I work harder and longer and am paid more than my father ever was, yet my lifestyle is probably in some major ways inferior. I worry that we have sold our heritage to the speculators and the "get rich quick" merchants.'

'Current economic policies are not making it easy for the average married couple to survive. Bills and interest rates are increasing at a much greater rate than wages.'

'We live on a farm, and with economic pressures as the are my husband must work off the farm full - time and then do our farm work when he gets home, cutting down on his family time. I also work on the farm and will have casual work off the farm when the children are old enough.'

'Wages don't meet living expenses which leads to using credit cards to pay bills and buy your child a birthday or Christmas present. We now have a home loan, personal loan, two bankcards, Mastercard, and have been trying desperately to pay off for years but only keep getting deeper in debt.'

The subject of how families juggle work and family life was examined in the last issue of Family Matters (No.28, April 1991, pp 6-10). It was found that irrespective of whether they were employed or not, women were still taking responsibility for most household tasks. More and more married women with children have jobs, thus sharing the breadwinning role with their husbands. How does this influence the management of finances within the household?

Data from the second stage of the Institute's Australian Family Formation Project, collected in late 1990 and early 1991, provide some insights into how the 1100 respondents (aged from 27 to 43 years) who were married or living with a partner managed their finances

Partners' Financial Arrangements

Respondents were asked: 'Who has control over the money in your present household - that is, who makes the big decisions about whether or not to make a major purchase?' In 75 per cent of cases, couples shared financial control, in 15 per cent of cases the husband had the main responsibility, and in 9 per cent of cases the wife did (Table 1).

Table 1: Who has financial control in the household?
Husband (male partner) mainly 15%
Shared 75%
Wife (female partner) mainly 10%

A third of the women interviewed in the survey did not have jobs, 23 per cent were employed part - time and 43 per cent had full-time jobs. Eighteen per cent of men whose wives did not work controlled the finances, compared with 13 per cent of wives who did not work controlling the finances. Threequarters of the couples interviewed shared financial control irrespective of whether or not both partners were in the workforce.

Table 2: Income sharing: couples where both partners earn an income
  Present personal circumstances
  De facto Married Total
Income arrangement  
Incomes separate 24%
Some separate, some combined 52%
Incomes combined 27%

Couples made different arrangements about whether they pooled their income or kept their money separate (Table 2). Where there was more than one income, those who were cohabiting were significantly more likely to keep their incomes totally separate than those who were married (24 per cent compared with 6 per cent). In 52 per cent of cohabiting couples compared with 23 per cent of married couples, there was some degree of sharing income but some was kept separate. In 71 per cent of marriages, incomes were combined, whereas this only occurred in 27 per cent of couples living together.

This suggests a fundamental difference in de facto and married relationships. It appears those living together are more individualistic and less coupleoriented. Of those who lived together, only about 70 per cent expected to marry their partner, and were also less committed and less likely to see the relationship as permanent.

Coping Financially in Difficult Times

When the second stage of the Australian Family Formation Survey was conducted in late 1990 and early 1991, the recession was starting to bite. Respondents were asked how they would describe their financial situation. As Table 3 shows, couples with only one breadwinner were having the most difficulty. Only 28 per cent of couples with one income were managing well, compared with 46 per cent of couples where the wife was employed part-time and 54 per cent of couples where there were two full-time workers. Families with two incomes reported far less financial difficulty.

Table 3: Work status and coping with current financial resources (all figures rounded)
  Wife not working Wife part-time Wife full-time Total
Financial situation  
Having difficulty 24% 13%  9% 14%
Just coping 49% 42% 37% 42%
Managing well 28% 46% 54% 44%

Families with children have additional financial commitments, and are therefore more likely to be feeling financial pressure. Nine per cent of couples without children were having difficulty compared with 17 per cent of couples with children. Forty-five per cent of those with children felt they were just coping financially compared with 34 per cent of couples without children. Most couples without children (57 per cent) were managing well financially compared with only 38 per cent of those with children.

The recession is having a considerable effect on young Australian families, particularly those with children or with one breadwinner. When respondents were asked what were the greatest pressures on them, financial and business pressures loomed large in their minds. Money was also a main cause of disagreement between partners.