Joint vs. Separate Checking Accounts – Which to Choose?
When my wife and I were still dating, we discussed money and marriage. Whew, that got heated. I was adamant that finances be kept separate, while she wanted shared accounts. Well, this was about 5 years ago, and I didn’t really understand why she thought they should be shared. Now I do. However, I’ve also learned other ways to manage finances in a healthy relationship from other married couples (oh, and how NOT to handle finances!).
Bankrate.com has a good, high-level discussion of Joint vs Separate accounts that I’d like to reflect upon from personal experience. Remember how I said I was vehemently against shared accounts? Well, after marrying, I became more conservative and also saw my wife’s point of view. Really, the main underlying issue to the whole matter is Trust. If you can’t share responsibility and accountability for your finances, then what does that say about your relationship? Now waaaaiiitt a minute before you start phoning the Insult Police and recognize I’m not commenting on your personal relationship with your spouse. Read on…
My objection with the separate checking accounts arises from hearing people say “It’s my own money, from my own paycheck. I can do what I want with it”, or something slightly less bratty. Ok, well, bottom line is that in a marriage, it’s your money AND your spouses money, unless there’s a pre-nup (yet another Trust issue).
I agree with the BankRate.com article that other methods do exist other than just a single checking account, but they get rather complicated. Also, there are reasons NOT to merge finances (one spouse with poor credit history, bankruptcy, etc. that could jeopardize all finances, not just theirs). Let’s discuss the 3 requirements for a successful financial union:
- One spouse is responsible for the finances
- Both husband and wife are accountable for the finances
- The relationship is built on trust
Ok, why would just one spouse get to handle all the finances? Isn’t that unfair to the other spouse? Isn’t that saying one partner is more responsible or smarter than the other? NO! Do we have 2 Presidents? 2 Mayors? 2 CEOs? 2 of any top leader? Ok, maybe somewhere there is a dual-power government, corporation or organization, but the vast majority is led by a single person. However, if we review the 3 tenets of financial union from above we’ll see the following:
- Even though the leader is responsible for the decisions and gets to sign the designer checks, that in no way relinquishes accountability to the other members of the government, corporation, or family for their own spending and decision making!
- Some people are just better with money than others. However, a good idea is to rotate responsibility for the checkbook and bills on a annual or semi-annual basis. Hold your partner’s hand for a few weeks to ensure a good transition of power.
- Make sure you have documented when bills should come in, where to send the payments, how much, etc. This can be done on a sheet of paper, in Quicken/Money, in a spreadsheet, but it must be in print form somewhere (not just in your head). This is also good disaster planning protocol.
Sure, you can keep separate personal accounts and pull from a joint account to pay bills, but why? Just so you can separate the bill money from the pleasure money? Do it on a piece of paper each month. Not only must you trust your spouse to spend wisely and to inform you of all expenditures (ALL of them? Yes, all of them), you also have to trust yourself that you can handle this responsibility and accountability.
Feel free to comment to let me know how you’ve managed to handle your finances. I’m always open to seeing successful marriages at work!
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My wife and I have had shared accounts just about since we started dating. We started in college (which helped) when we didn’t have much money. At first, I had all the money, because I’d had a well paying job over the summer. Eventually that ran out. Then she & I had part time jobs to fill in our cash needs.
Once we were married, we just had joint accounts, and things have always worked out well. I “manage” the funds, but we’re both accountable as you’ve said above. We both buy what we think we really need, but we always let each other know if we purchase anything substantial. If we have a large purchase to make, we discuss it first.
When I want to tighten our finances to save more, or I’m worried about how much we’ve been spending on restaurants lately, I just mention to her that I’m worried again about finances. Then she understands when I say I’d rather eat in, or decide not to purchase XYZ from Amazon this week.
It has worked out really well for us.
I can’t agree more that the underlying factor boils down to trust. The point of combining finances together as spouses rests on trust on every level: trust that you are making financial decisions for the better good of the both of you as partners/family rather than as an individual, trust that you each practice prudent judgement when it comes to financial decisions in the absence of the other, and trust that the financial decisions you each make are towards a common goal that you have set together. My analogy to marriages that keep seperate accounts is roommates. If you can’t have that fundamental level of trust with your partner, by cohabitating and splitting the bills and accounts, they are just essetially roommates. Thanks for such a great article
I definitely agree that when you are working towards debt cutting to join accounts but i don’t think it’s absolutely necessary.
I do NOT agree with the only shared account option. My wife and I have NO trust issues when it comes to money and we still have share and separate accounts. Most of our money goes into the shared account (80%). The rest goes into or separate accounts (e.g 401k, IRA, and savings). It should be straightforward to understand why we would have separate retirement accounts. The more important point here is what we do with the separate savings accounts. In our family we use them as an expense account. Meaning, every month we assume the money going into them was an expense even though those funds haven’t been used yet.. We use those funds to buy things birthday gifts, things for the home that are wanted, or any other personal expense. I think this approaches adds enough flexibility to the relationship to make it worthwhile.