Separate Bank Accounts vs. Combining Finances After Marriage

If you’re planning a wedding or recently got married, you may be wondering what to do with the separate bank accounts you and your spouse had before you got together. It’s common for married people to have joint accounts – but it’s not the only option.

Here at Addition Financial, we often have couples come to us and ask what their options are. Should they keep separate bank accounts in marriage or is combining finances after marriage the best thing to do?

Depending on your individual financial picture and relationship, there may be benefits to both ideas. Here’s what you need to know.

The Pros and Cons of Separate Bank Accounts in Marriage

A lot of people assume that they must combine their finances when they get married. But, it’s not a requirement and in some cases it may not be the right way to go. For some couples, separate bank accounts are a better option. In fact, it’s increasingly common. One study found that 28% of Millennial couples keep their finances separate.

Let’s start with the benefits of maintaining separate bank accounts after you get married:

• You’ll maintain your financial independence
• You can still contribute to shared expenses like rent, utilities and groceries
• You may have fewer money-related arguments than you would with a joint account
• Nobody can touch your money without your permission

It might seem that keeping separate accounts means that you don’t trust your spouse but that doesn’t have to be the case. Sometimes, it’s just about being comfortable being in control of your own finances.

There are a few potential drawbacks to maintaining separate accounts:

• It may be complicated to deal with certain transactions – such as checks made out to both of you
• Some couples may worry about a lack of transparency with separate accounts
• Keeping separate finances can lead to misunderstandings and confusion, especially around big purchases like a new home or car

You’ll need to weigh these things before deciding to keep separate bank accounts.

The Pros and Cons of Combining Finances After Marriage

There are benefits and risks to combining your finances, too. Every couple’s different and sometimes what works for one couple may not work for another.

Here are some pros of merging your money:

• Joint bank accounts ensure financial transparency and make it easy to trust your partner
• They also simplify payments for joint expenses
• With joint accounts, you can easily plan and budget for major purchases and be sure you’re on the same page financially

There are some risks associated with joint banking too:

• Opening a joint account means that both partners may be liable for debt accrued by either one. That includes credit card debt and student loan debt.
• You’ll be losing your financial autonomy – something that can be difficult for people with established finances and careers.
• Couples with joint bank accounts may find themselves arguing over money, particularly if one partner spends more than the other.

Joint accounts definitely make some aspects of marriage easier than separate accounts. However, you may find that having a joint account is not for you.

What About a Combination of the Two?

Do you need to choose? Is there a way to combine some areas of your finances and keep other separate?

The answer is yes! Some couples find that a happy medium is the best option. What that means is that they keep separate bank accounts where their paychecks are deposited and they handle personal expenses, including any debts from before the wedding.

Then, they open a joint account they use for shared household expenses. Assuming both of you are working, that would mean transferring money to the joint account as needed.

For many couples, that means deciding on an equitable split of expenses. If one of you makes a lot more than the other, then it may make sense to divvy up expenses on that basis. For example, if one of you makes 10% more than the other, you might split expenses 55%/45%. You can always revisit the split if your financial picture changes.

Final Tips

The key when deciding whether keeping separate bank accounts or combining finances after marriage makes sense is to think about what works for you. If one partner’s going to be resentful of the other’s spending, it might be best to keep separate account for most things.

The good news is that the decision you make now can always be changed if necessary. Some couples start off with separate accounts and later decide to merge their finances. And, of course, the reverse is true too.

The most important thing is to talk about money openly and honestly and do what you can to avoid disagreements about your finances.

The financial aspects of marriage can be tough to navigate. The information we’ve included here will help you make the best decision for you, your spouse and your marriage.

Whether you decide on joint or separate accounts, Addition Financial’s got the solution you need. Click here to learn about our checking accounts.