“What’s yours is mine, and what’s mine is yours.” But is that always the best approach when it comes to sharing your personal finances with your spouse? The experts say there are times when it is a good idea for married couples to combine their personal finances, and other times when that might not be the best idea.
The choice to have joint or separate bank accounts has pros and cons. It will largely depend on your personal circumstances and relative incomes. Here is a broad look at the pluses and minuses of joint versus separate banking accounts for couples.
Having Joint Accounts
There are three definitive “pros” for couples to open and maintain a joint checking account:
- Joint checking accounts promote trust and transparency – Most financial experts agree that shared accounts foster communication and trust. To manage money together successfully, couples must be open about their financial wants, worries, and goals.
- Joint checking accounts offer a clear financial picture – Another benefit of joint checking accounts is that they make it easy to gauge the overall finances in a family. Having too many bank accounts can muddy the waters and make it difficult to properly track spending. It will also make it harder to pinpoint areas where a family’s budget needs improvement.
- Joint checking accounts make it easy to plan and pay for expenses – Couples may want to keep joint accounts because they ensure both spouses can access money at any time. If only one person’s name is on an account, and that spouse becomes injured or ill, their partner may be unable to pull out the money needed for medical expenses or other bills.
Keeping Separate Accounts
However, there can also be some advantages for couples to keep separate individual bank accounts.
Separate accounts:
- Promote autonomy – Some people may balk at combining their assets with another person, even someone they love deeply. If two people marry after establishing their own separate careers and building up their own financial assets, the transition to a joint checking account might seem forced and unpleasant.
- Retain financial independence – That sense of autonomy mentioned above is not necessarily a bad thing. Separate accounts allow each partner to retain their financial independence and spend or save how they want. This may lead to more harmony in a marriage if each spouse doesn’t feel the need to justify spending habits. That autonomy may be particularly important to those who marry later in life and are used to managing their own money.
- Offer less ammunition for money battles – Keeping money separate also avoids a scenario in which a marriage goes bad and one spouse cleans out a savings account, leaving their partner with nothing. Putting money in separate accounts can also be useful if one spouse has considerable debt. Money from a joint account could be garnished. However, the spouse without debt can keep their money away from creditors by leaving it in their spouse’s name alone.
So What Should You Do?
It is not a clear-cut choice, and both separate and joint accounts can have advantages. That is why most financial experts suggest not to choose one or the other. The best “financial harmony” in a marriage is often accomplished when couples use both strategies. In other words, have a joint checking account for common household expenses and family emergencies. And keep separate accounts for a sense of freedom and financial autonomy.
The real key is to be open and honest about finances, and make all major financial decisions together.
Do you and your spouse have separate or joint bank accounts?