I always find that the topic of personal finances when you are married raises a lot of debate. Especially when it comes to the discussion of opening a joint bank account. I think the way married couples manage their finances is a very personal decision. But I will say that I believe in having joint accounts and assets, and I also believe in having separate accounts.
That's right, there are benefits to having both joint and separate bank accounts when you are married. I'll explain. Keep in mind that this article is purely an opinion piece. At the end of the day, it's important to do what works best for you and your spouse.
What are the benefits of having a joint account?
If you are married, the bulk of your assets should be joint. Things like your long-term savings, your house, and your investments are things you should manage together.
I say this because in marriage, you and your spouse are a team. As team players, you can grow your financial portfolio more significantly than you would if your portfolios were separate. Plus, it could make your marriage happier, according to one study.
There is also a legal benefit to opening a joint bank account. In the event that one spouse passes away, the other spouse can have access to the funds. They won't have to go through the hassle of dealing with wills or going through the legal system. It can provide a huge relief to have those funds available when you need them during an already very difficult time.
Having a joint bank account also gives you more liquidity. By having access to a pool of funds, you can withdraw the money in the case of an emergency without waiting for your spouse to transfer the funds to you.
Part of having joint accounts means you are discussing with your spouse often (or at least you are forced to).
This is one of the top benefits of having a joint account. You both can see what's happening with your joint finances, and you can make money decisions together. Ever heard the saying, "Two heads are better than one?"
It is a well-known fact that money is the number one cause of divorce in marriages. But if you are talking and planning together, then all your cards are laid out on the table. That way, you can minimize issues around your finances from a decision-making perspective.
The cons of having a joint account
There are many benefits to having a joint bank account. However, there can also be downsides if you just have joint accounts and don’t keep separate accounts as well.
Having to always talk to your spouse about money can cause one spouse to feel like they have lost their independence. If you always have to explain or justify a purchase, it could put a strain on the relationship. It could also cause one person to hide purchases or even open a secret bank account, which isn’t good for any relationship.
Another big issue is if one spouse has a lot of debt and a bad credit score. That could negatively impact the other spouse and have an impact if they later try to get a loan for a car or a house. If one spouse has more debt then the other, be sure to discuss how the debts will be handled before opening a joint account.
If the relationship or marriage ends, having joint bank accounts can also be a dilemma. This is because each spouse has the right to withdraw funds and close the account without their partner's consent. If the marriage ends badly, one spouse could easily leave the other without any money at all.
One way to help deal with the messiness of divorce before it ever happens is to sign a prenup when you get married. Before you sign any prenup, understand very clearly what's stated in it by having a sit down with your lawyer to go over it. If you already signed a prenup, find it and make an appointment with your lawyer to go over it.
What are the benefits of having separate accounts?
I'm a fan of separate bank accounts for day-to-day transactions. Decide with your spouse how much money you each get allocated on a weekly or monthly basis from your joint accounts. Then, transfer this into your individual accounts. Things like groceries and shopping money would go into these personal accounts. This way you are not constantly explaining every single transaction you make to each other.
Some couples also have separate savings accounts where they save for things they want to get outside of their joint finances. For example, your wish list handbag or shoes, your spouse's tech toys, etc.
You might also want to keep your accounts separate if you were married before or have a complicated family situation. For example, if you have assets from another marriage or bought a house before you got married, you might want to keep things separate. Having a separate bank account helps you both know what is yours and what is theirs.
What are the drawbacks of having separate accounts?
If you want to have a separate bank account because you want to hide your finances from your spouse, then think twice. This is a terrible idea. Don't use separate accounts to hide money. Financial transparency is important!
Remember, you are a team and you should always act in the best interests of your team so you can win together. Just because you have separate accounts for personal transactions doesn't mean you should go crazy spending large amounts of money without talking to your spouse.
For instance, my husband and I agree to have a conversation with each other if we spend more than $500.
Having separate bank accounts can actually put more of a strain on your relationship if you both are not upfront about your finances. Just because you keep separate accounts doesn't mean you should keep financial secrets from each other.
How do you decide what's best for you and your spouse?
No matter if you decide that opening a joint bank account is best, or if you decide to keep things separate, communication is key. How you choose to go about combining finances after marriage is a personal decision.
Talk about your finances on a monthly basis and make sure you are both on the same page when it comes to long-term financial goals like buying a house or saving for retirement. Take the time to budget for things you share, like housing and grocery expenses.
If you’re unsure about what method would work for you, then try both! Merge your finances slowly to see if opening a joint bank account works for your marriage before you dive in.
Managing your finances in a marriage is a personal decision. Regardless of what anyone says, figure out what works well for you both and manage your money accordingly.