A subject of perennial debate among our audience, I recommend couples merge bank accounts after marriage. If desired, you can then have separate accounts and/or credit cards that you use for small discretionary purchases or gifts for your partner.
Lots of people bristle at the idea of joining accounts, but here’s why it’s a good idea:
Joint accounts or not, what’s yours is mine
There are many arguments for keeping your accounts separate, but the fact is that once you are married, all of your assets are joined in the eyes of the law. (There are uncommon exceptions, such as those excluded by a prenup.) But basically, “what’s yours is mine” is the law after marriage.
Although there are some nuances in the law from state to state, if you were to get divorced tomorrow, everything you own would be split 50/50. The cash, the investments, the credit card balance, the house, the car, the dog.
Joint accounts are simpler
If you’ve lived with roommates or a boyfriend or girlfriend and done the whole “splitting bills” ordeal, you know that it involves extraneous accounting, lots of money changing hands and the occasional frustration when somebody’s late with their share. After getting married, why go through the trouble?
At the very least, create a joint checking account from which you’ll pay the common bills each month. Although another bank account adds some complexity, multiple accounts are often helpful for streamlining your finances.
Joint accounts are healthier for your relationship
Keeping separate accounts only creates unnecessary layers in your finances and opens the door to miscommunication at best and financial infidelity at worst. All too often, I hear stories of married couples who don’t have joint accounts (or one partner simply never looks at the joint account), and the couple ends up in foreclosure because one partner never knew the other was shopping or gambling instead of paying the bills.
Of course, there are times when you might legitimately want to conceal the purchase of a gift or other surprise for your spouse, in which case a small separate checking account or credit card makes sense.
It’s easier if something happens
Here’s a big one. God forbid something happens to either you or your spouse, having your assets in a joint bank account will ensure the surviving spouse has uninterrupted access to the funds. In the event your spouse dies, you may not be able to access his or her individual bank accounts until the estate goes through probate, a process that may take months.
Implementing joint accounts: The financial meeting
As for the logistics, I recommend newly married couples – if you haven’t done so already – sit down for a full financial review. Each partner should come to the table with a list of all his/her accounts, debts, and a copy of his/her credit score. Then, make a habit of repeating this every few months.
In my experience, one partner tends to take over handling the money more frequently, and the other partner can naturally be lulled into thinking “everything’s all set.” But that’s dangerous. Both partners should know what’s going on.
Then, decide which accounts to keep and which to close. Lauren and I have three joint accounts: a joint checking account for everyday expenses, a joint Capital One 360 online savings account for emergency savings and short-term goals, and a joint credit card.
(In the last case, there’s little reason to actually open a joint credit card account. Instead, the partner with better credit can add his/her spouse to the account as an authorized user.)
Couples will have to visit the bank together to sign paperwork to put both names on the accounts.
You’ll want to leave all accounts open for a month or two while they ensure all direct deposits and automatic debits are moved over to the new accounts. Then they can safely close the old accounts.
Some accounts can’t be joined. This includes IRAs which are individual by definition – they stay in one partner’s name.
Avoiding fights about money
Joining accounts can be awkward if one partner earns significantly more than the other, but that tension is most likely created by the income disparity itself, not the act of merging accounts. Both partners need to communicate their concerns and insecurities about money and understand that marriage is a partnership – once you’re married, “I don’t have an income, we have an income.” It takes years to get used to that, I know.
Merging accounts will very likely spark more disagreements and uncomfortable conversations about money with your partner than if you banked separately. But that’s exactly why I recommend it.