Should You Have Separate Accounts?
Share This
Money — the source of marital discord? Pshaw, says you — so long as your significant other manages money precisely the way you do.
Barring that, it’s probably safe to say that the complexities of coupled finances — disparities in salaries, differences in spending priorities, preferring offline to online banking — has occasionally impinged upon your happily-ever-after household.
Keeping all of your money matters completely separate seems the logical way to avoid conflict completely. It’s not. Nor is some generic formula for blending finances — or even copying the way your parents worked it all out. There is no one-size-fits-all solution.
“His,” “Hers,” “Ours,” Oy
I wish I had the answer to this classic coupled quandary, but the truth is that only you and your mate can find which account-management solution feels right for your coupling. Thankfully, there are just three main scenarios to try out:
- Joint checking and savings accounts. (“What’s mine is yours, darling.”)
- A joint account (checking or savings) as well as separate accounts. (“We’re all about letting each other have some space.”)
- Separate checking and savings accounts. (“Look how independent we are!”)
Here are the pros and cons of each. (For now, we’re just focusing on everyday money-management issues — checking/savings accounts and paying the bills.)
Joint checking and savings accounts: Do you and your significant other regularly talk money matters? You’d better, if you’re going to run your lives out of accounts that are “ours.” What’s nice about this setup is that it does indeed foster financial conversations. (If it doesn’t — and that causes strife in your relationship — perhaps this all-or-nothing approach isn’t right for you.) Completely merging your everyday money also makes joint expenses easy to handle and necessitates a lot less administrative hassle, since you’re not doubling up on account statements.
The downside of total money immersion is that it puts a lot of cooks in the kitchen — “my way or the highway” isn’t an option if you want to stay together. It also may place the burden of money management on one partner over another, which could make one partner feel resentful of the extra work, unless there’s a dishes/dog-walking chore tradeoff involved. It also means that there’s less privacy and independence, since everyone’s business is out in the open.
A combination of joint and separate accounts: For couples who dragged some outstanding debts into the marriage, such as credit card or student-loan debt, this setup may be ideal, particularly if one partner wants to tackle the pay-down on his or her own. A combination approach to accounts — some separate, some joint — can also alleviate some of the stress of distinctly separate expenses. It also exposes each of you to another money-management point of view — a “learning” opportunity, if you will.
The joint/separate approach does mean more up-front work — you have to figure out which expenses come out of the joint account and which ones don’t. If there’s a big disparity in your take-home salaries, but equality is important to you, consider having each of you contribute the same percentage of your income to the joint account.
Separate checking and savings accounts: In no way do separate accounts signify a lack of commitment to your relationship. They may indicate that you both like to do your own money math, though. Separate accounts do indeed give you the most autonomy of any setup — what’s yours is yours to manage as you see fit, and the same for your spouse. This approach may be necessary, particularly for spouses who are remarried and have other financial obligations, such as child support and alimony. You will, however, still get the eyeroll about whatever came in those department-store bags that you shoved to the bottom of the trash can.
The downside of keeping your cash in separate silos is the added hassle of paying for your shared expenses: Splitting fixed bills may not be a problem, but what about variable ones, such as a car transmission repair, or irregular savings goals for vacations, family gifts, and the like? When you’re a unit with two operating budgets, coming together can get as complicated as a multinational merger.
To-may-to, To-mah-to …
As complex as it may sound, coming to the perfect account-management setup is not a pass-fail task. If one option doesn’t work, just try a different one. Just remember that life is full of financial curveballs — new jobs, growing family, emptying nest, bad perms — each of which may require you to revisit the joint-vs.-separate account issue.
Related Videos
Popular Articles
8 Comments so far
leave a commentHere’s a tip for those who choose to do Joint Accounts. We were having trouble keeping track, because in essence you would have to balance both “checkbooks” every day after all your debit/checks for the day. We started using Xpenser.com, and it’s been fabulous. We simply text, IM or call Dialtodo and submit our expenses and deposits on the spot (while the receipt is still in hand after we get in the car). It has been fantastic! The only trick is being TRULY diligent in always putting the expense in, but other than that, it’s pretty effortless. Good luck!
Or you could do a budget together at the beginning of the month and know exactly what you have to spend where. Mint’s budget is not great but on the first of the month I update the list I have on the budget from my “master” budget spreadsheet. Then you know how much you spent when and where at a quick glance.
We Use the previous months income as the next months budget… i.e. Julys income is used for Augusts expense. That way you know exactly how much you can spend in the month. I’ve never spent less time on money matters than I do now…. 1/2 hour on the budget, 1/2 hour updating Mint’s Budget on the first of the month and Mabye another 1/2 hour total paying bills and updating Mint and my Master Budget sheet.
My wife and I use joint and separate accounts. We created our budgeted expenses here on Mint and updated it a couple times till we got it right. Now that we’re on track, we deposit enough to cover our expenses in the joint account and some in each of our personal accounts (the same exact amount). This works well because then we can each manage our own ‘spending cash’ without constantly having to check with each other.
My bf and I have a somewhat different way of doing things. I had a prepaid debit card that I was using for my SSDI payments. He didn’t have an account so I added him on to my account and got him a second card. His SSDI now goes on this account. I got another card for my self, and my SSDI goes on that account.
We have certain expenses that we have every month and we sometimes have other payments (ie. my laptop was made in two payments). Every month I arrange our expenses so that we both have about the same amount to spend for ourselves. I have been keeping this in a spreadsheet and just add a worksheet for the new month. Sometimes, depending on what we are paying for, he buys the cat food. Sometimes, I buy the cat food. When we have agreed to buy something, or do something, we figure out how we can still each have an equitable amount each month. This next month, I will be buying a round-trip ticket for my Mom’s 70th birthday. My bf will not be going. It will be around $300. What I will probably end up doing is putting $200-$250 into my account to pay for it. I also pay the space rent for our RV every month. I get about $300 per month more than he does, because his daughter is not yet 18.
There are no hard and fast rules about who pays for what as long as we each have about the same amount of money to buy things, after our bills are paid.
My boyfriend and I do the joint/separate routine. We make very close to the same amount, so when we bought our house, we set up a joint account that all bills and the mortgage get paid out of. We did a rough estimate of expenses and came up with a figure that we expected would cover everything for a month, then divided by two and rounded up just a little. Each month we each put this amount into the joint account, then go about paying all the house bills out. The advantage is that we have a single lump sum that we need to put in for “everything” for the month, and then our individual expenses are our individual responsibilities (and the left-overs are our own play money). Roughly every so often, we also have a nice little bonus in the joint account to spend on “joint gifts” for the house, like a new TV.
I’m going jobless for grad school in a few years, so we will see how well this theory continues on one income.
For richer or poorer until death do us part. That was the vow we made to each other. A joint account shows a commitment to that vow.
Not any more than separate accounts. At the end of the day, you both either rise or fall together – how you go up or down is a personal decision.
My wife and I do a joint/separate thing, except that everything gets dumped into the joint account and we get an allowance that is deposited into our separate accounts. That way, gifts are really from the heart and you get your own little bit of spending money that you can do what you want – spa or beer brewing – or buying lots of flowers.