After the wedding, nothing is harder than blending your life with that of your partner. But of all things, blending your finances will give you the biggest headache. Do you open a joint checking account and manage your money together? You can if you trust your partner. Or, you cannot, if you fear your partner might misuse the money. Whatever your reasons, here’s the case for and against joint accounts.
Pros of Joint Bank Accounts
Settling down with someone is an exercise in trust. Because you trust each other, you are, therefore, willing to share your lives, kids, names, and property. Extending this trust to both your finances benefits your marriage, says Keith Klein of Turning Pointe Wealth Management. According to him, joint accounts encourage joint financial planning while at the same time removing financial secrets between couples.
When you put your money in the same place, both of you know where the family finances stand. This is especially true if you pay your bills from the same account, says financial coach Kelsa Dickey. Without the benefit of perspective, couples can neither improve their budget nor track how they spend money, she adds.
Easy Access to Money
If you operate separate accounts, and your partner falls ill or suffers injury, what happens then? How do you access the money in their account to meet the medical expenses? With a joint account, you’ll never face such a scenario. Instead, since you jointly manage your finances, either one of you can take charge of the account when emergencies arise.
Cons of Joint Bank Accounts
Loss of Independence
Separate accounts let you shape your own financial future and keep your financial skills in top shape, things you lose when you open a joint account. This loss becomes particularly evident if your partner manages the joint account then later dies or leaves you. Emily Sanders of United Capital has seen this happen time and time again, especially in women, and she warns against it.
More Conflicts over Money
Without your own checking account, you must justify your expenses to your partner, and your partner, to you. However, no two people exhibit similar spending habits: We spend according to our personalities, Dickey reveals. Some people are hoarders, and others, spendthrifts, she adds. It’s, therefore, not hard to see why couples sharing joint accounts fight the most and hardest over money. In fact, they’re always wondering about how to close a joint bank account.
No Clear Boundaries
Klein reminds us of how without separate accounts, you fall victim to your partner’s financial mistakes, recklessness, or greed. For instance, if your partner falls into debt, creditors can attack the joint account. Or, in the event of a divorce, your partner keeps half of any inheritance money you deposit into a joint account. But if you keep it out of the account, your partner cannot claim it, she concludes.
Sharing a joint account draws you closer to your partner because it’s an act of trust. Also, you both have a clearer view of your finances. However, it can cause issues if trust is eroding in your couple. It’s up to you to assess your situation and see which option is better for you.