SHOULD YOU MERGE YOUR MONEY? JOINT ACCOUNTS VS. SEPARATE ACCOUNTS

There was a time when couples didn’t think twice about “marrying” their money after tying the knot. Having a joint checking and savings account was just the traditional way of doing things.

Today however, merging your finances isn’t seen as the only way. Many married couples maintain their own separate bank accounts, rather than combining their money. Ultimately, each couple needs to create a financial system that works for them, whether that be with joint or separate accounts.
Joint accounts do have their advantages. Here are a few to consider:

• A joint account can make it easier to pay bills and handle shared expenses. Since the funds are coming out of the same pot of money, there’s no need to “split the bills” or nag the other spouse for their share of the payment.
• If you’re looking to keep tabs on your combined financial picture, having your bills paid out of a joint account can make it easier to balance the books, since there’s no need to pinpoint which withdrawals or deposits came from which account.
• Each spouse has access to the account’s funds when necessary. This can come in handy during an emergency, or if one spouse dies. If your spouse dies and you weren’t named as a beneficiary on their account, you may have to rely on the legal system in order to gain access to the money.
• Both spouses contributing money to the same account can result in a greater account balance. The higher your account balance, the more likely you are to avoid monthly minimum balance fees.
• A joint account can force financial accountability and communication. With a joint account, each spouse can see what the other is spending, making each of you accountable for the purchases you make. If both parties view the account as “our” money, they may be more willing to discuss purchases together before making them, to ensure they fit within the budget.
• Having a joint account can help prevent additional stress during a crisis. For example, if one spouse loses their job, or is out of work for an extended period of time due to a medical issue, you won’t have to scramble to merge your finances, or change which accounts your scheduled bill payments are coming out of.
• If one spouse is a stay-at-home parent, having a joint account can keep them from feeling like they’re not being “compensated” for their job, or from feeling like they have to ask their partner for money.

However, combining your finances into a joint account can have its disadvantages as well. They include:

• You or your spouse may feel confined without access to “your own money”.
• With a joint account there is a lack of financial privacy, since you both have your finances exposed to one another. It can also make buying your spouse a present with your debit card a bit of a challenge. Having the store’s name and the exact dollar amount you spent right there in the account’s transaction history can really ruin a surprise!
• When one spouse enters the marriage with loans, credit card balances, child support obligations, or other types of debt, the other partner could become resentful of them being paid with joint funds.
• Since you both have access to the funds in the account, one of you could essentially empty the account without the other one knowing.
• With joint accounts, it’s common for one spouse to manage the couple’s finances, which could be a potential point of friction and resentment, depending on the couple.
• When you get married, you and your spouse may already have individual bill payments set up to come out of your respective accounts. Many couples don’t want to go through the hassle of establishing new joint accounts, un-scheduling existing bill payments, and rescheduling them.
• If you and your spouse decide to separate, the funds in a joint account can be messy to untangle, especially since both parties have the legal right to withdraw money from the account.

If you’re finding it hard to decide whether a joint account or separate account is right for you and your spouse, there is a third option – have both! Many couples decide to take a hybrid approach, maintaining separate accounts, as well a joint account where they each deposit a portion of their income.

Ultimately, no matter which types of accounts you choose, experts agree on one thing – it’s important for couples to openly and candidly discuss their finances on a regular basis.
You can learn more about BankFive’s checking account options here.
You can learn more about our savings accounts here.