It’s the eternal question for those who settle down together is and always will be: separate or joint bank accounts?
There are arguments for and against both scenarios. So sit down, read this with your boo, and then have a conversation about what best suits your relationship — because this could make it or break it.
Joint Accounts
Pro: You both contribute funds to the account. If you have a savings goal as a couple, you’ll reach it faster if you’re both depositing money into shared account. Simple math: Two incomes are better than one.
Pro: You’re both aware of what’s coming and going. You each have access to the account so you can check in regularly to make sure everything is on the up-and-up. This also will keep both of you honest in terms of deposits and withdrawals.
Pro: It’s easier to hold each other accountable. If, say, you’re planning to buy a house, a joint account ensures both partners have a skin in the game. Saving large amounts of money becomes easier when you’re working toward a common goal and holding each other accountable.
Pro: You can avoid probate to access the money if your partner dies. If your partner dies, and all his cash is in a separate account, then you’re at the mercy of whatever your partner left for you in a will.
Con: You lose financial independence. Financial independence should be one of our proudest accomplishments. Joe Gladstone, an assistant professor at University College London, says that “the decision to hold a joint account with your partner may have unintended consequences. Joint account holders spend less on purchases that are fun, enjoyable or excite the senses and more on utilitarian goods and functional purchases. Then again, someone who was prone to overspending might benefit from the reduced discretionary spending associated with a joint account.”
Con: It requires unwavering trust. If your relationship hits a rocky patch, your partner can withdraw every last penny from the account — and you can’t do anything about it.
Con: Your vulnerable to your partner’s legal problems. If collectors seize the bank account, they won’t be concerned that you’re also an owner. All they care about is that the money is owned by the person in debt.
Con: Your partner can use the funds to pay old debts. If the joint account was established to pay for your life together but your partner is using the money to pay old debts, it could leave a sour taste in your mouth.
Separate Accounts
Pro: You maintain your financial independence. As long as the bills are getting paid on time, you won’t have anyone breathing down your neck about what you’re doing with your money.
Pro: You don’t need permission to splurge. I don’t have many vices, but one of them is clothing. I like new threads, and I don’t want to feel guilty about buying them with money I’ve earned. Family man Jim Jacobs agrees. “My wife is a pretty independent person, and we both insisted on separate bank accounts,” he says. “The reason? I didn’t want fights about money. If she wants a pair of $300 shoes and the money is coming from her account, then go ahead! It’s a marriage saver when you don’t need permission from your partner for every discretionary purchase.”
Pro: You’re less vulnerable to your partner’s legal problems. If you keep separate accounts, your cash will be protected from your partner’s debt if collectors come a-knockin’ — although if you’re married, it’s not quite so cut-and-dried.
Con: There’s a lack of financial transparency. Some partners really want to know what’s going on with their significant other, and not being able to see what you’re spending your money on can lead to trust issues — especially if they suspect that you’re spending money on things like poker games and dancing ladies.
Con: They can foster resentment. You shouldn’t be ashamed of your income if you make more than your partner, but it’s also not nice to flaunt it by treating yourself to whatever you want. That causes problems.
Con: They’re hard to access by others in an emergency. If you’re in an accident — or faced with an emergency that leaves you unable to access your account — your partner can’t do anything about it unless you previously designated a Power of Attorney to make decisions while you’re incapacitated.
Con: It’s harder to keep financial goals on track. Savings goals are tougher to maintain when neither partner knows exactly how much is being put toward them. Are you saving twice as fast as your partner? Is your partner spending what they could be saving on frivolous things? You have no way of knowing, and if there’s a discrepancy that may lead to defensiveness and a few lies — neither of which is good for a relationship.
Photo Credit: morningshadow
Use both joint and personal checking accounts with the same bank. There’s likely a minimum monthly direct deposit amount.It makes paying bills much simpler and transferring money is free.
Replace “should we have joint bank accounst” with “should we get married” and it’s basically the same argument. If you don’t trust your partner, you shouldn’t share bank accounts. If you don’t trust your partner, you also shouldn’t get married.
You stole my comment Darryl. Agreed 100%.
I’d argue that you can trust someone completely who will screw you over when you least expect it. Which is probably why I trust NO ONE.
Friends of mine had a joint account for bills, and separate, personal accounts for their own personal spending. They said it worked well for them.
My husband and I each maintain a joint checking account, with both of us legally on both accounts. I have my paycheck direct deposited into one, manage part of our bills/ expenses, and the same applies to the account he manages. This way when we log into our bank we can look at both accounts and have complete transparency plus we share the responsibility of keeping track and paying bills. We had both been previously married to people who nearly destroyed our finances and this solution has worked great for us for many years.