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joint vs separate bank accounts

‘Will that be separate checks?’ The merits of joint vs. separate bank accounts

Published 1:54 Feb 13, 2024

If your goal is a romantic Valentine’s dinner, then that candlelit setting might not be the right moment to start a conversation about the relative merits of joint and separate bank accounts.

All the same, it’s a talk couples should have. At some point.

The internet percolates with articles advising romantic partners on how they should bank their money. Some writers favor separate accounts: Your money is your money! Others encourage commingled funds: We’re in this love together!

We surveyed several finance experts. Predictably, most of our sources played it down the middle. Couples might be best served by a mix of separate and joint accounts, they said. Each serves its purpose: joint accounts for joint expenses, separate accounts for separate ones.

“Having both types of accounts really lets you have the best of both worlds,” said James Royal, a principal writer on investing at Bankrate.

Yet, surprisingly, many couples use only one type of bank account. In a new survey by MarketWatch Guides, 41% of married couples said they use only joint accounts, while 20% said they use only separate accounts. The remaining 39% — not even half of the 2,000 people surveyed — reported keeping separate and joint accounts.

Which type of banking is better, if you must choose one?

First, here are three good reasons to have separate bank accounts.

Financial independence

Almost by definition, separate accounts give each partner a measure of fiscal freedom that a joint account cannot match.
“You always know how much is in there,” said Lili Vasileff, a certified financial planner in Greenwich, Connecticut. “You always have access to it. Whether you save it, spend it or give it away, it’s yours.”

Partners who keep separate accounts will never have to feel embarrassed about an impulse buy, explain an excessive restaurant tab, or seek approval for a big-ticket item.

“I think it’s important to just be able to do some things for yourself and not have to answer for everything you’re doing,” said Liz Windisch, a certified financial planner in Denver.

Different spending habits

What if you’re a penny pincher, and your partner is a profligate spender? You rejoice in building savings, while they live paycheck to paycheck. You’ve never, ever overdrawn your account. They’re overdrawn right now.

Separate accounts allow each partner to spend as they please, in a judgment-free zone. One partner can count every dollar, while the other spends with abandon.

The penny pincher will never face the indignity of a declined debit card. The profligate spender won’t get hassled over recurring fees for subscriptions they never bother to cancel.

“Compulsively monitoring your spouse’s every transaction on your smartphone can get viciously addictive,” advises TIAA, the financial services company, in a post titled “7 reasons why separate accounts are good for your marriage.”

Vasileff believes each partner in a relationship should have discretionary funds, or “play money,” to spend as they wish.
“Everybody usually feels better with some amount of money to keep in a stash, or to spend in a way they do not have to explain,” she said.

The worst-case scenario

This may not be the best topic for Valentine’s Day, but here it goes: Separate accounts give each partner an escape hatch in case the relationship ends.

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