Many couples, particularly newlyweds, feel compelled to combine everything they bring into the relationship—including financial assets and liabilities—as an expression of their union. Others feel its important to maintain some financial independence.
Studies show 76 percent of couples share at least one bank account. That means one in four choose to keep at least some finances separate.
No matter the arrangement or generational tendencies, these are personal and couple decisions. But they may as well be informed choices.
Sharing Bank Accounts
Youre in this together. You share a life and priorities like paying bills, saving and spending money on that life. Combining money into a joint account eliminates the who-will-pay-for-what questions that may have come up during your dating lives.
With debit cards, checks and online account access all for the same account, paying bills and tracking expenses are a lot simpler. When everything comes out of one account, both parties can monitor the activity and better avoid bounced checks, overdrafts and other surprises.
From a legal standpoint, a joint account also simplifies access to the funds should one of you die. No need to consult a will, estate plan or go through the courts. The surviving account holder retains full access to money in the account.
Keeping Separate Bank Accounts
There are plenty of good reasons to maintain separate accounts, especially if one partner has poor spending habits and financial discipline is an issue. Remember, with a joint account, either person has the right to spend every cent but youre both responsible for it. And, maybe surprisingly, its possible for only one party to close the account.
Enough with the negative scenarios. There can be positive motives for living together with separate bank accounts. Maybe youve already agreed for one to pay for A, B and C, and the other pays for X, Y and Z. Or one of you came into the relationship with a debt burden or financial obligations that the other shouldnt be responsible for paying. Perhaps you just want to have your own money. You want the ability to surprise your partner with a gift and not have it ruined by an online banking session.
Mixing it up Might Make Sense
Relationships are all about compromise, right? Plenty of couples choose to share a primary joint checking account but maintain individual accounts for different reasons.
Could be as simple as that gift you want to give your spouse or partner and dont want them to the transaction in the online statement. Or as complicated as funding a childs education when that child came from a previous relationship.
Blending families, households and finances often calls for a blend of account types. Heres an equitable approach: Lets say your spouse earns 55 percent of your combined income and you earn 45 percent. Tally up a months worth of joint expenses (rent/mortgage, bills, food, groceries, entertainment) and multiply the total by your income percentages.
Deposit accordingly into your joint account, and put the rest into individual accounts according to your needs: an annual getaway, gifts, child support, IRAs, season tickets. You get the idea.
No two couples are alike. Honor your relationship and your instincts. But also take an honest look at your situation—both relational and financial—and discuss the best approach to your financial accounts. You can choose love over money, or money over love, but one usually affects the other.