Vol. 9, Issue 9February 2018


Joint vs. Separate Accounts

When you marry or enter into a serious relationship, eventually you probably will get around to discussing whether you should have joint or separate checking accounts. There are pros and cons to each approach, experts say, and in the end, it probably comes down to the dynamics of your specific relationship.

There are basically three possible approaches:

Joint account. With a joint account, you pool your money into one account from which you pay bills and other household expenses. Both people can spend from the account, either by using a debit card or writing a check.

The main advantage of a joint account is that you both know where your money is going. There is little chance that you will double-pay a bill, for example, although it usually works best if you decide who is in charge of making sure the bills get paid. If your bank charges account fees, you will be paying those fees on only one account. Having a joint account can encourage – or force – you to have discussions about spending, saving, etc., and experts agree that talking about money early and often in a marriage can avoid problems down the road. Finally, if one of you should die or become incapacitated, the other would have access to the account.

The main disadvantage is that there is no privacy. If you want to buy your partner a gift, for example, the purchase most likely will show up in your joint account. Similarly, if you want to buy something for yourself that you don’t want your partner to know about, that also will show up. Some people feel that they don’t have access to their own money – especially if they had money when they entered the marriage or if one partner makes much more money than the other.

Separate accounts. It is possible for you each to have your own account. Of course, if you take this approach, you need to decide who pays what bills so that you ensure that all your bills will be paid.

The main advantage of separate accounts is that they are separate. Each of you has your own account, and your own financial privacy. You don’t have to explain or justify to each other how you spend your money.

The main disadvantage is also that they are separate. To start with, that means you have to decide how to divvy up your expenses. That is relatively easy with fixed expenses such as a mortgage, insurance, phone, etc. But what if one person usually buys groceries because the supermarket is on the way home from work? Or what if you have a large, unexpected expense? Separate accounts should involve regularly revisiting issues like this to make sure neither person feels taken advantage of.

A combined approach. Some couples have a joint account for paying most household expenses and then each has a personal account that they can use for whatever they want. You might also have savings accounts to help you save for major purchases or trips.

However, the more accounts you have, the more accounts you have to keep track of, the more fees you might have to pay, and the greater the possibility something might fall through the cracks.

Couples can – and do – make any or all of these approaches work. The main issue is to be honest with each other and to be open to making adjustments as needed.

Photo © Timothyoleary | Dreamstime