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4 Reasons to Have or Not Have Joint Accounts

joint finances marriage Jul 30, 2019

Recently, Jana came across an article on keeping separate accounts after you get married.  What do you think?  Is it a good idea to keep separate accounts?  The article cites research that states 28% of millennials are keeping separate accounts, which is nearly double the number of Gen X and baby boomer couples, so there’s definitely a shift in how couples are managing their personal finances.  In this blog let’s explore the plusses and minuses to having separate accounts.

This topic is something that comes up frequently in conversations regarding marriage and money.  A number of years back Scott was on a trip with a number of couples and one day when the group stopped at an ATM to get cash to pay Scott for the house they were renting one of the couples each stepped up to the machine to get their individual share of the rental cost.  When Scott inquired about why one of them didn’t just pay their entire share (Scott’s kind of nosey when it comes to money stuff) from a single account they said both of them had been divorced twice and didn’t want to deal with the money issues again if this third marriage didn’t work out.

This is one of the most common arguments for keeping separate accounts.  Just in case it doesn’t work out it’s easier to split say many couples.  In some ways couples like this, we would argue, are planning to fail.  In fact, this couple in question did eventually divorce a few years later, so maybe it was a good idea to keep their money separate! 

Just for the record we don’t have separate accounts, but we’re willing to keep an open mind as we explore some of the arguments for and against having separate accounts.  Let’s explore some potential benefits to keeping your money separate.

Benefits of having separate accounts.

Reason #1: Lack of trust.

One really good reason to have separate accounts is when you have a lack of trust with your partner.  You might be thinking why would you not trust the one you have married and share a bed with?  Isn’t trust a foundational element of a great marriage?  Well, a few reasons could be addiction problems such as gambling, drugs, alcohol, or pornography.  We’ve heard many horror stories about how one person in the marriage became addicted to something that lead to depleting the family’s bank accounts.

Reason #2: Lopsided assets coming into the marriage.

This reason is one that is not very common with younger couples who both come into a marriage with few financial assets, but for older couples it could be a valid reason.  This might be especially true for doctors who have significantly greater wealth than the one they are marrying.  Sherry is an example of such a doctor who came into her marriage with a net worth of more than a million dollars while her spouse had a negative net worth because of his poor financial choices when he was younger.  Sherry felt it was a potential risk giving her husband access to the wealth she had built based on his financial problems.

Reason #3: Divorce becomes less financially complicated.

We’ve heard it said that, “Marriage is grand, but divorce is one-hundred-and-fifty-grand!”.  There is probably some truth in that statement, especially if you’re a doctor with some significant wealth to deal with in a divorce.  Proponents of this argument suggest that if the statics are true that about half of marriages end in divorce why not plan for what could happen?  Just like the aforementioned couple Scott knows, it did make their divorce easier from a financial perspective.  However, in some states what you came into a marriage with doesn’t legally stay yours in a divorce regardless if you had separate accounts.

Reason #4: Separate accounts promote trust in a marriage.

Yes, you read that correctly!  Some argue that by having separate accounts it promotes trust in a marriage.  In other words, it’s like saying to your spouse, “I trust you so much I don’t need to see or have control of your money.”  Many also argue that by having separate accounts you will have fewer money fights, a top predictor of divorce.  In addition, separate accounts promote autonomy and not having to justify every dollar you spend to one another, which could also be a catalyst for arguments.

Benefits of having joint accounts.

Reason #1: A successful marriage is not about “you” and / or “me”, but about “we”.

How many people do you know that have a successful marriage who would suggest that having a selfish focus has been the key to their marital success?  We’ve never met such a couple, and we would guess neither have you.  No marriage will be a success in the long term if you maintain a singular focus after stating your marriage vows.  One of the keys to a successful marriage is serving the needs of one another, and by keeping your finances separate it illustrates you haven’t moved from you and me to we.

Reason #2: Money is a great revealer of the heart.

Jesus said, “For where your treasure is, there your heart will be also.”  Whether you’re a believer or not, you can likely agree that in America if one wants to know about the heart of another all they need to do is look at how they use their money.  In a marriage you share many things such as children, home, food, bed, etc. so why not money?  This may be the most challenging argument to combat against for having separate accounts. 

What you are saying when you are not willing to share finances is that money in some way has a greater value than your children.  If you’re willing to share children, who are no doubt more valuable than any financial wealth you may have, why would you not be willing to share finances?  Indirectly, what you’re saying by having separate accounts is that your money is more valuable than your children! 

Reason #3: Two are greater than one.

Marriage requires teamwork to win.  You have to work together to raise your children.  You have to work together to manage your household (i.e. cleaning, cooking, grocery shopping).  In many ways money is a key component in fueling much of what is required to successfully manage the logistically aspects of a marriage.  Things like goal setting, paying bills, and budgeting become increasingly complicated when you’re using separate accounts.  Are you paying the electric bill or am I?  Who’s going to pay for the hotel for our vacation?  How do you want to split expenses for the Christmas gifts this year?  Managing your finances as a team is hard enough.  Why make personal finance more complicated by working out of separate accounts?

Reason #4: More discussion about money.

One of the most common reasons we hear from couples who have become debt-free is the top reason for their success was communication.  Having combined finances promotes communication on how your money will be spent.  It promotes communication in doing your monthly budget.  There is also greater communication regarding big financial decision and purchases.  When your accounts are separate there’s little need to ask the other person if it’s OK with them if you buy that new car.  It’s your money after all.  Why do you need their permission to buy a car with your own money?

Our opinion.  Your choice.

We would suggest if you plan on getting a divorce it might be best to keep your finances separate, however, why get married if you plan to fail?  Getting out of debt is really difficult, perhaps even harder than getting through med school and residency!  Why make becoming a debt-free millionaire doctor even harder by working separately with your money? 

If you’re still not convinced that joint accounts is the best option, start by setting up a joint account you can both transfer money into and run your household from that account for a few months.  See how it feels.  Talk about how it feels.  Does it bring you closer together or further apart?  We would argue when you begin to share your money and go from being “me” to being “we” not only will it speed up crushing your debt it will also increase the likelihood your marriage will thrive and flourish for many years to come.



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