Joint or Separate Checking Accounts: Which is best for couples?

To share or not to share?

That is a question asked by many couples. In recessionary times, couples are more routinely entering marriage with various forms of financial baggage: unemployment, credit card debt, student loans, child support and bankruptcies, just to name a few. Determining how much of that load partners should share is tricky, and the answer differs depending upon the financial professional consulted or the couple involved.

Consider, for example, these takes:

From the Money Smart Life blog: “I think that all married couples, new and old, should hold joint checking and savings accounts. I understand the argument for separate accounts, but when you said “I do” at the altar, you made a commitment to become one cohesive unit. You are a team, and you need to act like one.“

From Charles Steele, personal financial planner in Atlanta: “I like to say start off with separate accounts, depending upon how long they’ve been controlling their own finances.”

Because circumstances have shifted so dramatically in the past two years, it is not a given that couples will automatically marry their finances as well. To maintain harmony, some have decided to keep separate checking accounts, at least early on. That has its pros, says financial planner Debbie Montgomery of Atlanta.

“If one spouse misuses [the] ATM, bounces checks or doesn’t keep transaction records, the couple could have a separate account,” Montgomery said. “If there are excessive bank fees for insufficient funds, this could effect the credit rating of the non-offending spouse.”

It could also point to a larger problem in a relationship: trust. Money, it is said, should never bring two people together or keep them apart. Often, it does both. Sharing a joint account forces couples to address those trust issues, and work together financially. Budgeting and working toward financial goals become a priority.

“Having just one joint account streamlines everything,” Steele said. “You do get a feeling of more financial bonding; like we’re in this together and there is no differentiation. It’s sink or swim together.”

Montgomery points out the advantages of having a joint account:

• A joint account can be used for bill paying and easier budgeting and record keeping.
• Having more than one account could mean more service fees.
• In the event of a death of a spouse, the joint owner of the account will have immediate access to the funds.

Another option, of course, is to have a joint account used for household expenses and contributed to on a percentage basis based on income, in addition to individual checking accounts. Additionally, you may want to have a joint savings account to be used for vacations and retirement, for instance.

One thing most can agree on: Couples should address their finances before marriage. Waiting until there is an issue, or finding out one year later that your partner is an impulse spender while you’re a frugal fanatic is a guarantee for friction. Resentment and power struggles can brew when expectations, earnings and responsibilities are off-balanced. If money issues arise, as they almost surely will, discuss it during calmer times and not when bills are late or creditors are calling. If necessary, seek help from a professional.

“The economy is definitely putting a strain on households,” Steele said. “If one person is laid off and the other person is stroking all of the checks, it is harder and you may need to come in and talk to a financial planner.”

Which approach do you think is best? Do you think having separate accounts is an indication of a lack of trust, or just a smart way to avoid mixing debt and other financial problems?

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