The Case for (and Against) Joint Checking Accounts for Couples & Spouses
Key Takeaways
- Joint checking accounts can help build trust and transparency between partners, but having separate checking accounts can help promote autonomy.
- Using both personal and joint accounts in your relationship can help you reap the benefits of each method.
- You can typically open a joint checking account in person or online, and you will need to make sure you have identifying details for both you and your partner.
One of the most fundamental decisions a couple faces is whether to treat money as a joint asset or something to be managed separately. Traditionally, married couples have been expected to keep their money in a joint checking account, and many finance professionals tout this arrangement as engendering trust between partners as they blend their financial lives and assets.
However, couples marrying at an older age may be more likely to bring substantial assets, income and even debt to a union. In those cases, separate checking accounts could be appealing. “If they have had a nasty prior divorce, they will be more protective of their finances,” says Mela Garber, a tax principal with New York City-based accounting firm Anchin and leader of its Matrimonial Advisory Group.
If you’re considering setting up a joint bank account, here are the benefits and drawbacks to factor in first.
Joint Bank Accounts vs. Separate Bank Accounts
|
Joint Bank Accounts |
Separate Bank Accounts |
| Promote trust and transparency | Promote autonomy |
| Offer financial clarity | Keep money out of reach from others |
| Make planning and paying expenses easier | Offer less ammunition for money battles |
When You Should Get a Joint Bank Account
Ask financial planners about the benefits of joint checking accounts, and they will likely point out that shared accounts foster communication and trust. In order to manage money together successfully, couples must be open about their financial wants, worries and goals.
With joint accounts, spending can be easily viewed by both spouses, and that level of openness can be reassuring. Though those with separate accounts also may have open and honest relationships, it may be that the most harmonious relationships tend to lean toward joint accounts.
Another benefit of joint checking accounts is the ease of gauging the overall finances in a family. “It’s easier to budget when everything is in one pot,” Garber says. Too many bank accounts can muddy the waters and make it difficult to properly track spending and pinpoint areas where a family’s budget could be improved.
Couples may also want to keep joint accounts because they ensure both spouses can access money at any time. If only one person’s name is on an account and that spouse becomes injured or ill, their partner may be unable to pull out money needed for medical expenses or other bills.
When You Shouldn’t Get a Joint Bank Account
Some people may balk at combining their assets with another person, even someone they love deeply. “If two people get married after establishing their own separate careers and building up their own financial assets, the transition to a joint checking account might seem rapid and unnatural,” says Celeste Revelli, vice president of financial planning integration at Fidelity Investments.
Separate accounts can also allow each partner to retain their financial independence and spend or save how they want. That, in turn, may lead to more harmony in a marriage if each spouse doesn’t feel as if he or she has to justify spending habits. Financial autonomy may be particularly important to those who marry later in life and are used to managing their own money.
Keeping money separate also avoids a scenario in which a marriage goes bad and one spouse cleans out a savings account, leaving their partner with nothing. Maintaining separate accounts can also be useful if one spouse has considerable debt. Money from a joint account could be garnished, but the spouse without debt can keep their money out of creditors’ hands by leaving it in his or her name alone.
However, establishing separate accounts does not mean spouses never have to talk about money. “In any successful relationship, you have to have some sort of open discourse about finances,” says Kerry Jackson, certified financial planner, partner and director of financial planning with wealth management firm Fish and Associates. It’s hard to achieve marital harmony without some type of ongoing conversation about shared financial goals, regardless of how daily expenses are handled.
The Best Arrangement May Be Combining Joint and Separate Accounts
While there are benefits to both joint and separate accounts, the best way to manage your money in marriage could be a combination of both. “The way I see it, it doesn’t have to be all or nothing,” Garber says.
“When I talk to couples, I recommend a blended strategy,” Jackson notes. Spouses can funnel paychecks into one joint account for household bills and then divvy up personal spending cash in separate accounts. Another option is to deposit paychecks into separate accounts and then transfer an agreed upon amount to a joint checking account to pay bills. Either way, it’s wise to create a mechanism, such as a power of attorney legal document or transfer on death provision, that allows each spouse access to cash in separate accounts should one person become incapacitated or pass away.
At the end of the day, couples need to make a decision that works best for their marriage. “Part of this conversation starts with setting financial priorities together, understanding each other’s values and aspirations, and where there are commonalities and differences,” Revelli says. If you and your spouse have trouble starting this conversation at home, meeting with a financial planner may help.
How to Open a Joint Bank Account
Much like opening a regular bank account, you’ll need to provide full names, government-issued photo IDs, Social Security numbers, mailing addresses, phone numbers and dates of birth for both you and your partner when you open a joint account.
For most banks, the process is like opening an individual account, just with the extra specification that the account will have more than one owner.
You should be able to complete the process in person or online. Both you and your partner will need to be physically present if you’re opening an account in person. If you’re opening the account online, make sure that you can upload images of each person’s photo ID.
If you’re looking to add an owner to a preexisting bank account, you will typically need to go to a branch in person. Online-only banks, like Ally, may require special forms.
