Separate or Shared Bank Accounts: What's Better?
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Separate or Shared Bank Accounts: What’s Better?

I remember returning home after my honeymoon totally relaxed and happy. It was an exciting point in our lives, full of possibility and with lots of new decisions to make as a young married couple. I changed my name, we got a new apartment, and also we took a little drive and went to the bank that we both used and joined our accounts.

I don’t remember having a detailed discussion about it. I don’t remember agonizing over the decision. It was just something we decided to do, likely because we both watched our parents have joint accounts and so it seemed like a natural next step.

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We were also quite young on that day at 22 and 25 and so we hardly had any money to join. Maybe that’s what made it all so easy. What’s the big deal about a joint account, when it only has $300 in it, right? I can say, though, that over the years we’ve never had a bad argument about money. (We like to argue about who does which chores instead. Somehow that inspires much more passion and anger than paying our bills!)

I attribute our relatively harmonious attitude about money in our house to joining our accounts in those early days. We’ve been forced to work together to maintain our accounts, pay off debt, and of course make plenty of mistakes along the way. We’ve gone through periods where I was a bit more controlling about spending, asking my husband about various charges in accusatory tones. However, for the last few years of our 5 year marriage, we’ve adopted a rule where each of us has spending money each month that we can use on whatever we want, so that eliminated that money tension altogether.

I say this as a disclaimer because I’m obviously happy having joint accounts, but that doesn’t mean I don’t see the benefits of keeping finances separate. There are so many articles out there that say managing your money one way is better than the other, so I wanted to delve into the issue a bit deeper. The truth is, there is no blanket right way that will work for everyone since each couple will have completely different situations and circumstances.

Many Couples Choose a Combination

Our 100% joined accounts are actually not as common as I thought. In fact, according to a calculator on Slate where I entered in our stats including income range, age, and education level (seen below), only 26% of couples like us have joint accounts. Far more have a combination where they each have their own individual accounts but use a shared account to pay for joint expenses.

Couples who use a combination of joint and separate accounts have to ask some important questions though. For example, does each person put in an equitable amount of money? Or, does each person put in an equitable percentage of his or her income? What happens if one person is a stay at home parent? How do you allocate unexpected bonuses? Who will be in charge of tracking spending and how will you measure net worth? Will you still sit down together and discuss your finances and keep track of all your accounts or is each person individually responsible for their financial fate?

Because of these questions and the complicated nature in which the answers might affect the relationship, it might take longer to work out some of the fine-tuning of having both individual and joint accounts. However, many couples report feeling both autonomous and like a team when using this method.

The Benefits of Separate Accounts

Similarly, many couples enjoy having completely separate accounts. The results of a survey that TD Bank conducted last year showed that “thirty-eight percent of individuals in relationships who maintain separate accounts said they do so for independence.” This was the most common reason for maintaining separate accounts, which shows that many people just like having control over their own spending habits without someone else looking over their shoulder.

The Wall Street Journal interviewed Kelly Long, a CPA and financial planner who says, “Many couples need to have separate accounts to maintain financial and emotional harmony in their relationships.” She argued that many people now get married in their late 20’s which means that many of their financial habits and accounts have already been established. Perhaps this is why joining accounts with my husband when we were 22 and 25 wasn’t that big of a deal. As recent college graduates, we definitely didn’t have any long-held beliefs about money or how it should be spent. I’d like to think that we’d still be willing to make some compromises on our money habits even if we’d gotten married later though.

Kelly Long also brought up another interesting point. She said that having separate accounts forces each person to “remain financially literate and able to manage money on their own” in the event of a divorce or death, but one could just as easily argue that if couples sit down together to look over their joint accounts, they can also remain financially sharp.

It Comes Down to Communication

Ultimately, it all comes down to communication and awareness. I don’t think that any one person in a relationship should have total control over paying all the bills and managing all the accounts. It’s the responsibility of each person to be aware of their finances, know bank passwords, and know when things are due, just as both people should take part in household chores or raising kids. Sure there will be times when one person has to do the brunt of the work in all those categories but at least trying to be a team throughout all of life’s responsibilities will enrich and strengthen a partnership.

Whether or not a joint account is right for you and your partner is a totally personal decision that will be unique to each couple. This decision should be based on what is best for your family as a whole. If one partner spends too much then perhaps it’s best to keep money separate or have them agree to weekly check-ins. If one partner makes a significant amount more than the other, then perhaps it’s more equitable to share. Really, each couple is completely different and whether or not they have children will also impact just how much they need to share in terms of financial responsibilities.

USA today recently featured a graphic (seen below) that American Express produced that shows when couples began discussing financial issues. Interestingly enough, most couples start talking about money when they are dating, and perhaps that’s the best time to decide how you will handle your future accounts as well.

Really, as long as you’re a couple who actively discusses money, does not keep financial secrets, and is open to growing your net worth right along with your partner, it doesn’t matter exactly where your money is located.

The problems come when one partner hides spending, has uncontrollable credit card debt, or is in some way living a financial life that is harmful to the family. If you can avoid that by being open, generous, and respectful of your partner’s wishes then you’re likely to have a long, successful relationship that’s built on trust and common goals, regardless of whether your money is separate or not.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Catherine Alford is an award winning personal finance writer who contributes to several online publications. She received a B.A. from The College of William and Mary and an M.A. from Virginia Tech.
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