Unlike previous generations, today more and more couples are electing to maintain separate financial accounts. But is this the wisest decision? Ask enough financial experts and you’re sure to hear plenty of benefits and drawbacks to merging your finances.
So how do we clear the muddied waters? Well, there are many factors that determine the successful navigation of relationships and money besides the simple desire to maintain your financial freedom.
A few items that couples must consider before they sign on the dotted line are one another’s financial responsibility (or lack thereof), spending habits, current debt situation, desired level of financial independence, and overall dependability.
BENEFITS OF MERGING YOUR FINANCES
1. The first and probably most frequently assumed benefit to a joint bank account is the ease of use for the couple. Both people have access to the account, they can each make deposits and withdrawals, there’s only one budget to create and manage, and there’s only one account number/PIN number to memorize.
2. A second benefit is that a merged bank account is an easy way to keep track of and pay common household bills such as mortgage, utilities, credit cards, television, and car payments. With a joint account, there’s no arguing over who pays the bigger bills and who gets stuck with what.
Merging accounts is like a unified front on the financial battlefield. You also don’t have to negotiate who will pay for unexpected financial emergencies like car repairs and medical expenses.
3. With more jobs requiring travel time, merged accounts allow the spouse staying at home the freedom to take care of whatever financial situation may arise when the other spouse is out of town. Yes there are auto payments and nifty phone apps, but certain situations may still require face time with your bank.
4. There will be two people working for the common good of the family finances instead of just one. Can you say “accountability”? Again, this benefit is a side effect of both parties being in agreement about the household economic situation and future economic strategies such as saving for retirement and college for the kids.
DRAWBACKS TO MERGING YOUR FINANCES
1. Both parties must be trustworthy. The drawback comes when one person in the relationship cannot be trusted with access to the entire household income. Most financial experts will tell you that merging your bank accounts should only be considered within the confines of a committed relationship. No one at the bank can stop a joint owner from withdrawing all funds from the account.
2. Another drawback to merging your bank accounts is that you might feel too confined or restricted because your money is shared between the two of you. You may grow feelings of resentment toward your spouse if you don’t feel you have the freedom to buy what you want, even when you think you can afford it.
3. Lastly, all funds in a joint account are at risk from creditors who might only be targeting one of the account’s owners. Instead of half of your household income being targeted by creditors or lien holders, a joint account opens up your total financial life to the risk of determined bill collectors.
Search long enough and you’ll find economic professionals recommending a litany of different ideas. Some recommend marital joint accounts, others say the smartest thing you could ever do is set up separate bank accounts, and still others will tell you that 3 bank accounts is the way to go (a joint account for bills and two separate accounts for leisure activity and luxuries).
Whatever you decide, make sure your decision is acceptable to you and your spouse. Research all available possibilities, talk about it together, go over the pros and cons, and make the best decision that fits both of your lifestyles and beliefs.
Daniela Baker is a social media advocate at CreditDonkey. She’s been married for nearly ten years and is a mother of two. She hopes this post will help couples who dare to walk off the beaten aisle.
Image: Fork / Merge by Sam Grover Licensed CC BY-NC 2.0
This author's bio can be found within the main article text.
