Maybe I was just old fashioned, but when I got married, I assumed that everything would merge: family, households—and money. As far as I was concerned, a joint bank account was de rigueur, like sharing a bed.
I soon learned that married life was complicated—that, in fact, there are many good reasons for maintaining separate bank accounts in marriage; it might actually make a relationship stronger. As in the case of a snoring partner relegated to a separate bed, separate bank accounts might even save a marriage.
Here are some benefits of separate accounts for you and your spouse to consider:
- You have premarital savings. Americans are waiting longer to settle down—the average age of a first-time bride is 27, up from age 20 in 1960.1 Getting married later means you're likely to bring more to the union—not just life experience and wisdom, but also financial assets. Anything you acquired while single, like that $30,000 in your savings account, won't be considered marital property, so it may not make sense to merge it into a shared account. The same holds true for that $50,000 inheritance from your grandfather. If you transfer it to a joint account, your spouse may have a claim to half of it in the event of a divorce.
- Your spouse has premarital debts. Likewise, if your spouse entered the marriage with student loans, credit card debt, or alimony and/or child support payments, joining accounts could result in having some of your hard-earned income garnished to pay off those debts—not something that someone who is debt free with a pristine FICO score might be on board with. A joint bank account could be vulnerable to your spouse's creditors, while leaving your precious dollars in an individual account can protect them. To start on the right foot with your other half and avoid resentment from brewing, schedule a time to sit down with them, ideally before tying the knot, to discuss pre-acquired debts and how to deal with them fairly.
- Money has psychological consequences. Having a separate bank account in marriage gives you a sense of financial independence, self-identity and empowerment.
- You make more than your spouse. I have friends who out-earn their husbands by a considerable margin and don't like the idea of splitting the difference, no matter how educated or progressive they are. They work hard for that money—so why shouldn't they be allowed to keep some of it for themselves? It really depends on your dynamics as a duo. Ultimately, you and your spouse need to decide what percentage of your incomes should be considered joint and what shouldn't.
- You can spend according to your temperament. Nobody wants to scold or nag, but it's hard to hold your tongue when your significant other is a spendthrift—or its opposite, a penny-pincher. Why can't they stick to a budget? Why are they so cheap? Compulsively monitoring your spouse's every transaction on your smartphone can get viciously addictive. Separate accounts, meanwhile, nip resentment in the bud. Better to go your separate ways banking-wise than to separate down the road because of bickering over bitterly contested dimes. If you already have a joint bank account and money arguments are getting out of hand, deciding to go back to separate accounts can raise the white flag and declare a ceasefire on hostilities. Here's more on how to discuss money when your spouse is on another planet, personality-wise.
- You might get rusty. When couples share a joint bank account, what sometimes happens is the money-savvy partner takes control of the household finances. My husband was happy to abdicate responsibility—he knew from the get-go that I was better at managing the green stuff—one of the reasons he married me to begin with! A perfectly workable strategy, at least for the short term, but what happens if you get divorced or the financially literate partner dies? Sadly, I see a lot of widows and divorcees struggle with basic budgeting, saving and debt management because they'd gotten so used to outsourcing financial decisions to another person. If they'd kept separate accounts all along, they'd both have retained the skills required to manage money.
- You can have it all. In marriage, you generally can't have your cake and eat it, too, but when it comes to money, you can enjoy the benefits of separate accounts and share a joint bank account. My husband and I have realized that individual accounts are a key ingredient for a harmonious marriage—but that doesn't mean we don't also have a joint bank account for shared bills and household purchases, as well as a joint savings account for vacations and other shared goals. If you find this approach works for you, it's crucial you sit down at some point to agree on how much you'll each deposit into these accounts per month.
Ultimately, you should do whatever makes the most sense for you and your partner. Whether you choose to have separate, joint or both types of accounts, the key is to communicate frequently and openly to find the best path forward.