Separate vs. Joint Bank Accounts

Benefits of Opening a Joint Bank Account

Many couples feel that opening a joint bank account is one of the ultimate signs of commitment. There are certainly a number of benefits to pooling your money:

• Streamlined, Convenient Shared Finances. When all your money is in one place, paying bills is a breeze. If you’re paying your car note out of one account and your power bill out of another and your rent or mortgage out of a third account, keeping track of all that can be exhausting. Having all your transactions in one place can make it easy to know what’s going on with your money at all times.
• Shared Responsibility. Two heads may be better than one in terms of keeping an eye on money coming in and money going out. A couple with a joint bank account is less likely to be surprised by a purchase or caught off guard by fraudulent activity.
• Clear Account Ownership. In the event that one spouse passes away, the other spouse will retain access to the money in a joint account without having to refer to a will or jump through legal hoops. If each spouse has a separate bank account, the surviving spouse may have to go through a lengthy legal process in order to claim money in an account that they do not have legal ownership of.
• Speedier Goal Acquisition. . Some couples may find that opening a joint bank account helps them to reach their financial goals. In fact, a recent study found that 30% of married Americans rely on their spouse to help them manage their savings and investment goals.¹ Whether they’re saving for a large purchase or paying off debt, a joint account helps them to see where they’re at and what financial steps they need to take to get where they want to be.

Drawbacks of Opening a Joint Account

While there is convenience to having all your money in one place, there are some potential drawbacks that may make a strong case for being married with separate bank accounts:

• Less Financial Autonomy. Combining your life’s savings with someone else’s can feel like a loss of personal independence. A spouse goes from being totally on their own and handling their own money and then being expected to hand over some of that financial control to someone else. This combining of finances works well for some couples but may cause others to feel stifled.
• Communication Issues & Conflict. When communication issues merge with financial issues, it can be a recipe for disaster. One major drawback to opening a joint bank account is that if spouses are keeping financial secrets, it can lead to real problems in the marriage. If one spouse is keeping a secret bank account, racking up debt on a private credit card, or lying about account activity, then a joint bank account is probably not the best move.
• Income or Debt Disparity. If one spouse enters a marriage with student loans, credit card debt, child support or other large debts, this can certainly be cause for problems, especially of those debts are going to be paid with funds from a joint bank account. This may lead to resentment from the other spouse, who is now partially responsible for paying for their partner’s debts. Couples should have frank discussions about their separate debts before deciding to blend their money.
• Asset Allocation After a Split. It may sound like a plotline from a movie, but it’s not uncommon for a breakup or divorce to lead to a drained bank account. A joint bank account means that both spouses have equal ownership of the funds within. If the relationship goes sour and one spouse drains the account, they’re within their legal rights to do so.

Opening a joint account is also on the way toward becoming a generational differentiator: A 2018 study noted that 28% of Millennials in committed relationships kept finances separate.

While there may be social pressure to open a joint account, being married with separate bank accounts may be the right choice for some couples. However, having separate bank accounts doesn’t absolve couples from financial responsibility. You’ll still need to communicate with each other and come up with a strategy for staying organized and paying bills and staying on top of debt.

One strategy that many couples are trying is to open a joint check account for some portion of their income and keep separate accounts for the other portion. Shared household expenses come out of the joint account, but the personal account provides a little financial independence. Another tactic is to open a joint savings account for a goal like buying a home or saving for a child’s college fund and keep individual checking accounts.

Financial solutions for married couples are not one-size-fits-all. Spouses should have honest discussions about their debts, goals, and strategies for saving and keeping on top of their finances. But whether you’re choosing to create a joint bank account or maintaining your individual accounts, you can still track your budget with Money in Excel, a dynamic smart template and downloadable add-in for Microsoft 365 subscribers. Couples who can talk frankly about money and who work together to meet their financial goals are on the right track, no matter what kind of bank accounts they choose.