Being newly married, my wife and I are still considering whether it makes sense for us to combine our finances into one joint bank account or not.
It’s a tradition for a couple to merge all of their belongings together when they get married. This includes their money along with all of their other personal belongings.
That also means taking equal responsibility for paying bills or building up savings. It also means combining things like tax refunds. It’s basically the ultimate gesture of trust in your new partner.
But this largely started decades or even centuries ago, when the man was the primary breadwinner and women weren’t likely to be working or earning money at all.
Do joint bank accounts still make sense in today’s world where both partners are working?
Should married couples have a joint bank account? There are definitely pros and cons. For example, a joint bank account streamlines your finances, but it also means a messier divorce if you and your partner ever decide to separate.
TD Bank did a survey in 2016 and found that 76% of couples share at least one bank account. But that also means that about a quarter of couples keep their money completely separate.
Millennials are actually the least likely to be in favor of combining their finances into a joint account when compared to older generations.
Deciding how to manage your bank accounts should be one of the first decisions you make as a married couple. In this article I’ll look at the pros and cons of combining your finances into a joint account to help you make an informed decision for yourself.
Pros of a Joint Bank Account
Transparency. For a new couple, a joint bank account is useful to see where money is going and get a good idea of your partner’s spending habits. Both partners can be aware of any irresponsible spending before it escalates into a large debt.
Easier to manage. Having all paycheques go into the same account and having all bills paid out of the same account makes things easier to track. It gives a clear overall idea of your financial situation as a couple. You’ll spend less time is spent tracking monthly expenses and deciding who needs to pay what.
Equality. Having a joint bank account encourages income sharing. It also promotes a more cohesive and united-feeling relationship. It changes the perspective from “my money” to “our money” and gives partners more trust in one another.
Increased reward points. If you collect air miles or get cash back on purchases, you’ll get twice as much. Since your annual spending on the account is higher, you might also qualify for a better credit card with a minimum spend amount too.
Cons of a Joint Bank Account
Combined financial identity. If all of your money is going into a joint account, you’re no longer building a credit score or maintaining your own financial identity. Any hits to your credit score as a couple will continue to affect you, even if you get divorced.
Unfair if you don’t have equal assets. One partner might be coming to the relationship with a ton of stocks, bonds, inheritances, or property. The other might only be bringing debt, credit card balances, and owed child support or alimony. It can be unfair to combine everything together. Although I’d argue that if there’s that much disparity between assets and you don’t want to be 50/50 then you should really get a prenup.
Messier divorce. If you separate or get divorced, having all the money in one account can make things harder to separate. Plus one account holder can withdraw the whole account balance without the other person knowing.
No surprises. Normally not having financial surprises is a good thing. But what about when it’s time to buy Christmas or anniversary gifts? Your partner will be able to see exactly where you’ve been shopping and how much you’ve paid on your bank statement. The idea of buying gifts for each other is kinda weird when you’re tapping into the same account of money anyway.
No privacy or independence. You might feel uncomfortable sharing all of the details of your income and spending habits with your partner.
Relationship conflicts. See above. A lack of privacy means there’s a lot more room for bickering and complaints about small purchases. You’ll see every coffee that your wife buys on the way to work, and she’ll see every video game that you buy. Having to explain yourself constantly gets old real quick.
Legal issues. If your spouse dies, the bank may freeze the joint account and you’ll lose access to all your money until you can provide a copy of the will or other documentation to prove ownership. That makes it really difficult to pay any expenses in the meantime.
Using A Joint Account AND Separate Accounts
There is a compromise between using a joint account or separate accounts. You can do both!
You can keep your money separate, but then use a joint account to pay any combined bills. This hybrid approach can be a good first step if one of you is hesitant about combining your accounts completely.
That way if you want to use your own money to buy something expensive for yourself, it’s less of an issue.
The downside to having a personal and joint account is that it can become a hassle to transfer money from your bank account to the joint account for expenses each month. And to remember that you have to do it.
You might also incur more bank fees. Both for having multiple accounts if you aren’t able to keep a high enough balance to waive any fees. Plus any fees for having too many transactions or e-transfers.
It also makes it harder to keep good records. Things are spread across multiple accounts, some of which you might not even have access to.
Setting Your Financial Goals and Expectations As A Couple
It makes sense for you and your partner to set financial goals together, whether you plan on getting a joint account or not.
Some things to consider include:
- How much you’ll each put into savings/investments each month
- How to manage everyday spending (like gas, groceries, or eating out)
- Will you pay off any debt you’re bringing to the relationship together or separately?
- How will contributions to the joint account work? (Are you going to put in 50/50, or if one partner earns 70% of the household income, should they contribute 70% to the joint expenses?)
- Is your partner trustworthy? Do they have any history of gambling, drug problems, or past financial difficulty that could lead to poor decision making in the future?
- What is each person’s credit score?
Conclusion
Opening a joint account with your new spouse can be the ultimate gesture of trust.
But it’s a huge decision that will affect the rest of your financial life. So you should carefully consider both the benefits and drawbacks before you make a decision.
You and your spouse should have a discussion about joint accounts as soon as possible, ideally before the wedding.
A joint account provides great transparency and makes it easier to manage your income and outgoings. But it also means less privacy, it puts your individual credit score at risk, and can be messy in the event of a divorce or death of a spouse.
Ultimately your decision to get a joint bank account or not will be up to your personal preferences and needs. But hopefully I’ve provided some good arguments for both sides to help you consider the right option for you.
For my wife and I? We haven’t 100% decided yet, but I think we are pretty strongly leaning toward switching to a joint account.
Do you have a joint bank account with your significant other? Why or why not?