We understand that getting married is overwhelming enough and the last thing you want to think about is how you should setup your checking accounts. But it is a very important decision that must be discussed thoroughly with your spouse.
To assist you in the decision making process, we decided to survey 25 accounting and financial professionals by asking them the following question:
Survey Question
If you were advising a newlywed couple on how to setup their checking accounts, would you advise them to setup:
A) Separate Accounts Only
B) Joint Accounts Only
C) Two Separate Accounts & 1 Joint account
D) Other & Explain
Survey Results
The majority of the respondents indicated that in most circumstances they would advise their clients to go with Option C or to setup two separate accounts with one joint account for common expenses. However, almost all of the respondents stated that there is no “One Size Fits All” answer as several factors must be considered when reaching a decision and full financial disclosure between spouses is crucial.
Why You May Want to Open Only Separate Accounts
Risk Factor. “How often do you hear “success stories” with joint accounts? More often than not, going joint is usually a mistake. People have strengths and weaknesses which is why we have partners to help balance ourselves out. Divide up the expenses equally, or not but either way 1 person is usually the more responsible one for handling the finances. So, let them keep track of it on their own without adding complications.”
Why You May Want to Open Only Joint Accounts
Trust Factor. “They are married now, a separate account leaves room for exit and lacks the trust factor.”
Crisis Factor – Accessibility to Funds. “If your wife or husband become ill and you are not on the checking account you not have access to the money to run the household…and they should be concentrated on more important things…like family and health.”
Convenience Factor. “Joint accounts for everything. If the couple wants to setup “separate accounts” for their own allowances these accounts should be joint as well. A couple should have full easy access to any money that the couple has, should issues arise. In times of crisis, that last thing a couple needs is the slightest difficulty in accessing any funds.”
Why You May Want to Open 2 Separate & 1 Joint Account
Different Financial Profiles. “I would recommend a joint account to operate the household. If either spouse has some assets acquired before marriage that they wish to retain as property it would make sense to keep a separate account for them. For example, if a spouse has an inheritance and it’s invested with Fidelity, they might wish to have a money market checking account along with their mutual fund accounts. Once those accounts are commingled with joint assets they become community property in a community property state such as California.”
Assign Responsibilities With Mutual Interests. “Finances aren’t suppose to solidify the marriage. Each should have an account of his/her own. Some situations call for a joint account also to pay common expenses like housing etc. But regardless of the account structure, couples should have a clear agreement on how life will be funded. Who works, who contributes what etc..”
“Joint Accounts for house expenses, separate for any personal expenses. Also, like everything else they will encounter, they need to be able to discuss & plan financial matters in a civil environment. It’s about resolving issues and problems, NOT assigning blame! That means full disclosure, including each one’s credit history. They must be realistic which means that they must agree, before anything else, that one person will be the final authority in making decisions in case of disagreements. Like all decisions, they must be made in the overall BEST interest of the family.”
“I really can’t think of any circumstance that would lead me to believe there shouldn’t be a joint account for a married couple (living together) to handle the common household bills. If either spouse wants a separate account without spouse’s access or signature, I would not advise against it at all – but would advise against keeping it a secret. It’s the secrets, not the fact that there is separate money, that I believe are more harmful to a marriage in the context of trust and spending habits.”
Some of The Other Factors That Should be Considered
Spending Habits. “There are several variables you need to take in consideration. The main one would be the people themselves (i.e. what one person main think is a luxury, the other person may consider it a household expense that should be purchased using a joint account.)”
Individual Expectations. “With most questions in life, there is no “one size fits all” answer. Where do they live; how much do they trust each other; what do they want; how much effort do they want to put into their finances ect.? All these factors and more enter into the correct answer for their individual situation.”
Personality/Behavior Traits. “An exploration of the couple’s emotions and beliefs/thoughts/attitudes that lie beneath their ultimate decision is very important. I have seen couples with his/her/our accounts, and complete transparency, end up in conflict. For example, one wife was upset that her husband was spending too much (of his own money) on his “freeloading” relatives. Another husband was angry that his wife was spending too much of her own money on the purchase of shoes that she never wore. I encourage all couples to understand the WHY behind their decisions regarding the HOW.”
Culture. “The answer depends partly on the culture. In India, marriage is for life. The partners trust and respect each other. In these circumstances, a joint account is mostly held. Even if it is an individual account, the signed check leaves are kept in a common place. Having a joint account or access to the funds reinforces the trust between them.”
Mutual Respect. “As a product of a single parent family, I always wanted “his, hers, and ours” checking accounts. I have been married for 17 years, lived with my husband a few months shy of 20 years and we never had separate checking accounts. All I can say is there is a high level of mutual respect that comes into play with solely joint account(s) as well as common interest and open communication. If your relationship is not made that way, then separate accounts would be best with a joint account for household or common expenses…I have seen all three scenarios and each scenario in its own right works for them.”
Spouse’s Employment. “I would suggest joint unless one of them is in a high profile position (e.g. self-employed business owner) that could be an easy mark for a business related judgment or levy of some sort.”
Other factors mentioned by the professionals include:
1) Financial goals (Income Levels, Savings, Debt)
2) Family goals (Children, Home, College, Retirement)
3) Marriage History (1st or 2nd or x Marriage)
4) State of Residence (i.e. California is Community Property State)
5) Educational Background (Financial Comprehension)
Top 10 Financial To Do List For Newlyweds
If you are wondering what other decisions you should be concerned with besides setting up a checking, refer to our recently published piece “Top 10 Financial To Do List For Newlyweds in Today’s Economy.”
