SHOULD COUPLES HAVE JOINT OR SEPARATE BANK ACCOUNTS?
It’s not necessarily given that newly married couples will merge their individual accounts into one joint account. Finances are often complicated . Also, the couple might want a sense of autonomy and financial independence.
Combining accounts can simplify money management for married couples. But it can also make it more difficult. Sometimes combining all income into a joint account can muddy the waters, add confusion and complications, and cause resentment and power struggles. So what’s a couple to do?
Before you tie the knot, talk about how you’ll mingle your money. Calmly express your opinions and discuss the ramifications of the different options.
One Joint Account
One option is to each put all of your earnings into one joint account. With this system, you both add money to the account, and you both spend and pay bills from the account. The amount you each contribute or spend depends largely on how much you each earn, your expenses, and how you divided household expenses.
If you’re both comfortable with this approach, it’s certainly the easiest logistically. But if one of you is deeply in debt or is notoriously bad at keeping track of checks and ATM withdrawals, this may not be the best method for you.
Instead of a single account, some couples establish a joint account while retaining their separate accounts. They each pay an agreed-upon amount monthly into the joint account and use this account to pay the household bills. Meanwhile, they use their individual accounts to cover individual spending.
One of the big advantages of this method is that each person retains autonomy and financial independence, which helps avoid the use of money as the power in the relationship. There’s no one looking over the other person’s shoulder or questioning purchases.
If this method is used, come up with a method of determining how much each of you will contribute to the joint account.
Set up a budget so that you know what your shared monthly expenses are and how much will need to go into the joint account.
If you both earn about the same amount, it makes sense to each contribute the same amount to the joint account. If one of you earns substantially more than the other, it’s fairer to contribute on a percentage basis.
Set up a joint savings account that each of you contributes to for your shared financial goals, such as saving for retirement, investing, buying a new vehicle, taking a vacation, and paying for your kids’ college education and other financial obligations from the personal accounts.
Which to Choose?
Neither of these methods is right or wrong. Resentment over money can fester and eventually poison a relationship if it’s not addressed in a way that satisfies each partner, so what’s right is what works for you as a couple. For your long-term relationship, you both need to feel good about how the money works in your relationship.
The same idea applies to savings. You both may have savings goals, but if one of you makes far more, should you automatically save more in your joint accounts?
Having these kinds of discussions can help both of you to feel good about the decisions you’re making with your money. When both couples have a voice in household money management, there’s less room for disagreements to arise.