It's a complex decision for married couples: how do you split finances? Some couples pool everything together in joint accounts, sharing all income and expenses. Some prefer separate accounts, managing shared expenses individually while maintaining personal spending autonomy within marriage. And some couples take a hybrid approach.
In community property states like California, earnings and assets during marriage are typically deemed jointly owned by spouses, usually 50/50. Other states consider spouses’ finances to be more separate from a legal perspective.
As we’ll explore in this article, each approach comes with its fair share of pros and cons. This is a highly personal decision that has both financial and emotional components. So, it’s important to consider what works best for your family.
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- Joint accounts can make managing household finances simpler and more transparent, although can lead to feelings of dependence or unnecessary oversight.
- Separate accounts can give each partner more independence over their spending decisions, but can add complexity to managing shared expenses and ensuring fairness.
- Taking a combined approach can be win-win in terms of managing your money efficiently while having some spending freedom for fun, personal purchases.
Using Joint Accounts
Married couples often open joint checking and savings accounts to manage finances, fostering shared responsibility and transparency. You also might decide to add your name to your spouse’s existing accounts, rather than opening new ones.
For couples who decide to pool all their money together, “a joint account is the perfect place for all your income to land, making it easy to pay the household bills from there,” says financial coach Melissa Mittelstaedt.
Joint accounts demand trust with shared access, fostering transparency for managing bills and expenses more easily.
“Couples who are married and have joint accounts can easily keep track of their finances and expenditures. This allows them to plan for their future goals and assess their current financial status,” says Annette Harris, an accredited financial counselor and owner of Harris Financial Coaching.
Keep in mind that opening joint accounts for some financial decisions doesn’t mean you have to share everything. Joint accounts for shared expenses make sense, offering a practical approach for many couples. Access to joint accounts ensures shared ownership and legal recourse, providing security in the event of a worst-case scenario.
Pooling all funds can limit individual spending, demanding clear communication on shared money usage.
According to Mittelstaedt, “A con that can come with joint accounts is one partner becoming the household CFO. There can be tension when someone asks, ‘What was this transaction at Target for?’” In this way, transparency can also lead to tension regarding judgments about individual spending and even trouble keeping surprise purchases like gifts a secret.
“Whenever a large withdrawal is made for gifts or other expenses, the partner managing the account must be notified. This can lead to questions and discussions about the purchase, which may cause discomfort or unease,” says Harris.
Pros of joint accounts
Some of the top benefits of sharing accounts as a married couple include:
- Ease: One joint account can be easier to manage than two or more individual accounts as you can track transactions in one place.
- Transparency: You both have visibility into your shared financial picture — being able to easily see each other's activity can help you get on the same page and stay honest with each other.
- Automatic rights of survivorship: In the event one of you dies, your partner automatically maintains access to any joint bank account.
Cons of joint accounts
While there are many benefits to joint accounts, consider potential negatives such as:
- Miscommunication: While joint accounts can be easier to manage, it’s possible that spouses who don’t communicate well end up on different pages about how money in shared accounts should be used.
- Excessive oversight: The flip side of transparency is that one spouse might take things too far and can lead to tension if one of you doesn't approve of certain personal spending with joint funds.
- Lack of privacy: Too much transparency also means that spouses lack privacy to buy things as they please, even for what should be joyous purchases, like birthday gifts for one another.
Related: What Is a Sinking Fund?
Using Separate Accounts
As they decide how to split finances, some couples opt for separate accounts to manage their money independently within the relationship. Like joint accounts, personal accounts also come with their fair share of pros and cons.
Managing personal accounts in marriage offers spending freedom but adds complexity to financial dynamics within the relationship. If your partner isn’t pulling their weight, for example, you might feel obligated to cover their shortfalls. Overspending by a partner may strain joint finances; separate accounts might revert to joint management to address shared responsibilities promptly.
Separate accounts relieve spending pressure; partners have limited scrutiny, allowing more financial autonomy in personal purchases.
“The most glaring pro to having separate bank accounts is the autonomy. Each person handles their money the way they want to,” says Mittelstaedt. Using personal financial accounts offers autonomy, eliminating the need for constant check-ins with your partner on spending decisions. Using personal financial accounts offers autonomy, eliminating the need for constant check-ins with your partner on spending decisions.
If you pool everything together, is it fair if the lower-earning spouse spends more than the higher-earning one, for example? This can get a little tricky, as perhaps one spouse takes on more household responsibility and thus has less income.
Maintain individual accounts if you want spending to reflect salary and avoid financial complications.
Separate accounts prevent one spouse from bearing the financial burden of the other's overspending, based on income differences.
However, separate financial accounts can also lead to separate lives. Marriage combines finances, and maintaining separate accounts might lead to hidden money, impacting the couple's ability to achieve financial goals. They could also conceal purchases, which can hamper the couple's ability to achieve their future financial goals, says Harris.
Managing finances separately can be stressful, especially if one spouse struggles to handle money independently. “One spouse may be responsible for paying most of the bills or struggle financially without the other spouse's support, causing stress within the marriage,” says Harris.
Another difficulty of having a separate account system is deciding what things qualify as personal expenses vs. shared expenses. Is a parent's portion a separate expense and the child’s meal a joint expense when dining out? Or if one spouse likes to cook more than the other, should they pay more for groceries? Defining rules for who pays for what can get tricky when questions like these arise.
“It takes a thoughtful conversation to figure out a fair way to split the household expenses so everyone feels comfortable,” Mittelstaedt advises.
Pros of separate accounts
By maintaining separate financial accounts while married, you can potentially enjoy benefits like:
- Independence: You likely share a lot as a married couple, so having individual financial accounts could be one way to have more independence when it comes to how you manage your money.
- Less spending guilt: You don’t have to justify each purchase with your spouse — it’s up to you what to spend money on. As long as you have enough in your separate account to cover it.
- Proportionate spending: While fairness is debatable, one reason to have personal accounts could be to ensure that each spouse spends proportionally to their income.
Cons of separate accounts
While dividing your accounts might feel freeing in some ways, there are some possible downsides to watch out for, such as:
- Financial infidelity: If you’re not sharing accounts, that could potentially lead to financial secrets and even what’s considered financial infidelity, where you’re hiding or lying about finances.
- Potential stress: Just because you maintain individual accounts doesn’t mean you won’t face shared financial issues. Like if one partner overspends, causing the other to have to cover a shortfall for necessities like rent.
- Difficulty separating joint vs. separate expenses: It’s not always clear what’s a joint vs. separate expense and this may lead to tension and feelings of unfairness.
Related: How Many Bank Accounts Should I Have?
Taking a Combined Approach
Couples can opt for a flexible approach, combining joint and separate accounts for a balanced financial strategy in marriage. You can take a combined approach.
“Some couples prefer to merge all their finances, which is a good idea if both partners are financially responsible and trust each other's spending habits,” says Harris.
“In my case, my spouse and I have both joint and separate accounts. We have a joint account to pay for our bills and mortgage. Additionally, we have a joint savings account for our future goals. We also maintain separate accounts for our individual spending and goals,” she adds.
When combining finances, decide on sharing expenses between joint and separate accounts, determining each spouse's allocation. You also have to weigh whether contributions and expenses get allocated differently if one partner earns more money.
Figuring out what this looks like for you can require some tough conversations.
Dividing equally may leave one spouse with no discretionary income, causing turmoil and feelings of injustice in the relationship, says Harris.
“Depending on our income fluctuations over the years, we have divided our contributions for joint expenses fairly. We individually cover personal expenses like salon visits, buying equipment, gas, and fast food,” says Harris.
Choosing joint or separate accounts isn't strict. Careful financial planning is crucial for a successful marriage, minimizing issues.
Pros of a combined approach
Mixing joint and individual accounts offers the best of both worlds in managing finances together.
- Flexibility: You can enjoy the benefits of both joint and separate accounts and accommodate the different financial habits and preferences you might have.
- Shared responsibilities: By maintaining joint accounts for common expenses like bills and mortgages, couples can share the financial responsibilities, fostering a sense of unity and cooperation in managing household finances.
- Individual autonomy: Separate accounts allow each spouse to maintain financial independence and avoid potential conflicts over individual spending habits.
Cons of a combined approach
While the combined approach offers a solid middle ground for managing finances as a couple, it's not without its downsides:
- Complexity: Coordinating contributions and expenses between different accounts requires careful planning and communication, potentially leading to confusion or oversights.
- Potential for inequality: Deciding how to split shared expenses between joint and separate accounts can be challenging and may result in unequal contributions and feelings of unfairness, particularly when married couples split finances. Partners need to communicate openly, establish clear expectations, and find a solution that works best for both individuals to maintain financial harmony.
- Communication challenges: Failure to have tough conversations about financial goals, spending habits, and income fluctuations could lead to misunderstandings and financial disagreements, especially when married couples split finances. It becomes crucial for partners to openly discuss and align their expectations regarding money management to ensure a harmonious financial journey.
FAQs
Is it normal for married couples to have separate bank accounts?
There is no such thing as normal when it comes to personal finances. You'll need to figure out what works best for you and your partner. Lots of married couples split finances, having a joint account for household expenses. And personal accounts for individual spending. However, do whatever works best for your individual family.
How many accounts should a married couple have?
Couples typically have a checking and savings account, with additional ones for specific purposes or organizations. In the context of managing their finances, married couples often split finances to navigate shared responsibilities effectively.
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