When to Move to Joint Financial Accounts

The Joint Bank Account Debate

Should you keep separate or create joint financial accounts when you get married? It’s one of those age-old hot personal finance topics. When do you know if it’s the right time to do it? Is there ever a right time if you’re not married?

I will tell you what worked well for my wife and I. However, I realize that I might somewhat be in the minority on this one (particularly amongst married couples). There’s really three options:

  1. Shared everything. All funds go into one share account.
  2. Everything stays separate in individual accounts.
  3. Shared account for shared expenses, individual accounts for individual expenses.

How my Wife and I have Chosen to Integrate our Finances with a Joint Bank Account

joint accountsFirst off, we both work and have zero children. We have decided to have a shared joint account in addition to separate accounts.  Here’s how it works.

  • Joint Bank Account: We have a shared joint savings/checking account. In this account, we direct deposit a little more than we need for all basic shared expenses: mortgage, utility, insurances, food, etc.
  • Separate Accounts: At the same time, we also have separate bank accounts. All funds that don’t go into our joint expenses account are direct deposited into these separate accounts. From the separate accounts we pay for individual expenses. My wife pays for student loans. I pay for expenses to run this website, for instance. When I bought a car, I paid entirely for the car (I have since sold it and bus to work).

Pros to the Joint Bank Account and Separate Account Option

  • It forces you to be frugal. If you buy things together above and beyond your joint monthly budget, you have to transfer funds over from our individual accounts. It’s a constant reminder of what you’re spending.
  • It forces you to be accountable for our own spending habits. There’s no animosity about what your joint bank account looks like.
  • It forces you to budget for larger expenses like vacations, education, vehicles, etc.
  • This is a great way to combine finances if you are living with your partner, but are not bound by marriage. If the relationship ends, you split the joint account that you’ve contributed equally to and go your separate ways.

Cons to the Joint Bank Account and Separate Account Option

  • It doesn’t account for periods in a relationship when one partner has significantly higher income than the other. For instance if one person stays home to raise children or becomes unable to work, there’s not much alternative than to completely combine finances.
  • It’s not as easy. It does require a lot more communication. For us, this is a good thing. For other couples, it might not be.

At some point (probably when we are forced to due to life circumstance), I expect that we will fully combine our funds. But for now, if it ain’t broke, we won’t fix it.

Joint Bank Account Discussion:

  • If married or in a committed relationship, what type of financial account setup do you have?
  • What problems or benefits have you seen from that setup?

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