To share or not to share…bank accounts that is. When you finally take the step and tie the knot, one of the new concepts that you will be faced with is whether or not to combine you and your spouse’s bank accounts, to maintain separate bank accounts, or to do a little of both.
Marriage and Finances
On one hand, there is the argument that now that you are one, so should everything else that you and your spouse engage going forward. Think about it… what is a marriage supposed to be built upon? Honesty, openness, transparency…so wouldn’t it make sense just to combine them and that be it? The opposite position is that maintaining financial independence that you had going into a marriage allows the individuals to maintain a sense of autonomy as they grow into their new union.
Then there are other considerations…spending habits, credit history, responsibility with money…all things that are some of the leading reasons couples end up in rocky times (or even worse, divorce). So, which path should you take? Well, that is one that will be unique to your situation, but, here are some considerations.
1. Income (or incomes) of each person in the couple. For instance, maybe one person makes significantly more than the other, thus when it comes to bills and expenses, will each person pitch in the same amount regardless of their earnings or will it be determined by the income. How about the scenario where one of the two doesn’t work? Is there an expectation that the banking will be shared since only one earns money?
2. Does one or both of the people have existing debt? If so, how will that be addressed? Will community income be used or will the spouse with the debt need to pay it from their earnings?
3. How will spending of combined accounts be managed? Will communication of large purchases in advance an option? If one spouse is financially irresponsible, if a combined account, how will it be addressed to make sure you have money to pay the bills? Maybe maintaining separate accounts addresses these differences.
4. When there are separate accounts, each person is responsible for managing their account. Once combined, someone will need to be in charge. Not setting this in place can result in spending the same money twice, only to discover it when checks/debit cards are declined and you suddenly experience overdraft or insufficient funds charges.
5. What happens if your marriage fails? If your accounts are combined, both parties will have access. When there are separate accounts, although some states may recognize both accounts as community (shared) property, spouses will more likely be able to pay expenses for those they are responsible without issues from the other spouse (e.g., one spouse cleaning out all of the cash in the account without notice).
Bank accounts and marriage
In the end, not having a plan in the beginning (when it comes to banking and finances) is the first step towards likely disagreements and fighting about money. Sharing finances in a marriage is important. Keep in mind that countless studies have ranked money as the number one reason couples argue…and divorce. When it comes to money issues, people tend to be emotional and reactive. Thus, take the time to sit down with your new spouse to evaluate each of your approaches to banking and managing finances and determine which path will yield the best results for a long and happy marriage.