Should You Use Separate or Joint Accounts?

In every serious, long-term relationship, you reach a special moment when one of you has to pop a very important question: joint or individual accounts? (To be clear, this query is not fit for first-date chitchat; merging your finances is as big a commitment as exchanging keys or vows.) The right answer will be as unique as you are. “There is no magic bullet,” says David Fleisher, president of Firstrust Financial Resources, a financial-planning firm in Philadelphia. “But the healthiest of relationships that I see are those who ensure that both people are on the same page.”

You just have to talk out your financial goals and agree on a plan that works best for you and your mate. Be sure to consider your respective money attitudes and behaviors when deciding your strategy. Ask each other: What bills need to be paid regularly? Are you a stickler for paying bills on time, or do due dates tend to slip past you? What short- and long-term savings goals do you have? What are your spending habits? And of course, you’ll want to address these 4 Critical Money Questions to Ask Before You Get Married.

This talk will lead to your solution for our original question: Should you use joint or separate accounts? I spoke with several happy couples about how they manage their money together, and each of them offered a different strategy. Here are some of their stories:

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All-In Allies

• One joint checking account, savings account and credit card

• Two individual credit cards

Our first couple opened joint checking and savings accounts after getting married. Although the Mrs. makes significantly more than her Mr., they agreed to pool their incomes entirely and tackle their expenses together. They both deposit every paycheck directly into those accounts, and they use the checking funds to cover all of their costs. The couple also opened a joint credit card, which they pay off every month. Sharing everything allows them to have total transparency, even though she’s the one managing the books for now. Both of them still keep their own cards, too, but they really use them only to buy each other little surprises (all together now: awww).

Separate Sweethearts

• All separate accounts

• Divvy up shared expenses

On the other end of the spectrum, our second couple maintain separate accounts. They divvy up their shared expenses -- for example, one person covers the cable bill while the other pays for the cell phones -- such that they’re each responsible for about the same amount. They used to split the rent evenly, too, but once they moved to a slightly more expensive place, they agreed that the person who makes more would pay for the additional cost -- an extra $75 a month. Their system may change once they get married next year, but for now, it works just fine.

Long-Distance Lovebirds

• Separate checking accounts and credit cards

• Divvy up shared expenses

• Joint savings account for shared spending goals. Both contribute to kids’ college funds.

Like the previous couple, these two also keep separate accounts. And the strategy has stood the test of time and distance. When they first got married 15 years ago, they had to live about 1,500 miles apart for work and school. Obviously, separate accounts worked best for them. Now, they’ve moved under the same roof and added two kids to their household. But for the most part they’ve stuck with their successful strategy and kept their checking and credit-card accounts separate.

They periodically go over their budgets to decide who will be responsible for paying which bills. As their incomes and expenses have changed over the years, so have their responsibilities. They use a joint savings account to save for big-ticket items, such as a down payment on their house. And they both contribute to their kids’ college funds.

Allowance Lovers

• A joint checking account to pay for shared expenses

• Joint savings accounts for shared goals

• Specified allowance paid to two individual accounts that each person is free to spend however he or she chooses.

Some of the couples I spoke with like to maintain both joint and separate accounts. A pair of sweeties in San Francisco deposit their incomes into their joint accounts first and then pay certain dollar amounts to their individual funds -- his monthly allowance is $150, and hers is $200. And they’re free to spend or save it however they choose.

Another couple -- a set of mates in Maryland -- have a similar strategy. The husband, who is the primary breadwinner, keeps about 15% of his salary for himself and transfers the rest to a joint checking account, which the couple use to pay for the majority of their shared expenses. His wife, who’s a full-time mom to their daughter, picks up extra income by babysitting other people’s kids and keeps that cash in her own individual account.

Contributing Couples

• Two individual checking accounts

• A joint checking account and a joint savings account, into which they make budgeted contributions for shared expenses and goals

Another pair decided to maintain their individual accounts, but they also contribute funds to a joint account to cover shared expenses. One couple, from Virginia, set a dollar amount that each spouse would deposit into a joint account monthly. Another couple, from Maryland, calculated a percentage of their incomes they’d each contribute to their shared account.

Chatty Match

• Two individual checking accounts

• Divvy up shared expenses, and alert each other to individual costs of more than $100

• Joint savings accounts for emergencies and short-term goals

• Shared credit card

My husband and I are part “contributing couple” and part “separate sweethearts.” We maintain individual checking accounts, as well as credit cards, and divvy up the bills. But we each also contribute to joint savings accounts for emergencies and short-term goals (we’ve recently drained our holiday fund) and a shared credit card.

To loop one another into our spending activities, we talk to each other before buying anything that costs more than $100. But these aren’t crazy, in-depth discussions. For example, one night, I’ll say, “Hey, I’m going to Anthropologie to get a new dress for Dave and Kerry’s wedding,” and he’ll say, “Okay.” It’s not about getting permission; we’re simply keeping each other aware of our spending. (Bonus: This stipulation often saves me from excessive spontaneous spending -- talking about the cost of, say, those hot new boots I want makes me think twice about buying them.)

Keep Talking

Again, there’s no perfect answer to the great joint-versus-separate-accounts debate; each couple here has simply figured out what works for them. The common theme you should take away from all their money-management stories is that they talked about and agreed upon their strategies.

And remember: One conversation is never enough. Your relationship will evolve throughout your life together, and your financial plan must adjust accordingly. So be sure to review your finances periodically -- “once a month, or even as infrequently as once a year, for ten minutes, might be all that’s necessary to keep healthy household finances and a healthy relationship,” says Fleisher.

Do you and your beloved identify with any of the couples above? Or do you take an entirely different approach to managing money? Please let us know in the comment box below.

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