How Joint Bank Accounts Work

When you’re in a committed relationship, you share your life with your partner. But while there will be times when you’ll want to do everything together, there will be others when you just need some space. The same can be true when it comes to your finances. That leads to one of the great questions every couple in a long-term relationship must answer: Should you use a joint bank account?

The answer will be different for every couple and situation. Below, we break down the pros and cons of joint bank accounts and separate accounts to give you some things to consider when you think through what may work best for you.

How do joint bank accounts work?

A shared or joint bank account—checking, savings or otherwise—works the same as any other bank account, but two people can make withdrawals, deposits, and decisions about the money. Either person can use as much of the money as they want, regardless of whether they deposited it in the first place.

Pros and cons of joint bank accounts

A joint bank account can help you work together as a couple when it comes to your finances and money goals. “Joint accounts can be an effective way to manage funds as a couple,” says Anna Burton, a planning excellence lead at Northwestern Mutual. “Each account holder can see transactions and have access to joint account balances, allowing for budgeting transparency.” However, joint accounts aren’t right for every couple, especially if you have different spending habits.

Here are the pros and cons of sharing a joint bank account so you can determine what would work best for you and your partner:

Pros of joint bank accounts:

Convenience: One of the pluses of joint funds is simplicity. Everything is in one place, which makes it much easier to monitor what’s coming in and what’s going out.

Transparency: Joint bank accounts can also help couples keep each other in check on spending habits and allow each account owner to access all account information at any time, especially given banking technology. “Before setting up a joint account, each party needs to review the terms and conditions of the account and be aware that each transaction will be visible to the other party,” Burton says.

Equality: Couples who work less or have one spouse stay at home with a child might feel a joint account is a fair way of sharing funds, even if their income is unequal.

Teamwork: “Joint accounts can provide a sense of teamwork, under the right circumstances,” Burton says. “By combining incomes and expenses, joint goals can be established and effectuated.” In this way, having an account together can be helpful for combining and growing your money to work toward your common goals.

Saving on fees: Joint accounts might also save on penalties and fines. Most financial institutions have a minimum balance required to maintain in order to waive fees. For instance, if the bank requires at least $1,000 in the account, your pooled money can help you reach that threshold more easily.

Cons of joint bank accounts:

Potential money spats: While some couples thrive with the transparency of joint accounts, others do not. If all of your money comes from one pot, you might feel the need to discuss each item you buy with your partner. This is why Burton recommends that couples continually have “open and honest communication regarding spending habits, savings goals, future plans, like children, house purchase, and so on.”

Lack of privacy: While keeping secrets is never a great idea in relationships, you and your partner may want some degree of privacy in how you spend your money, which you won’t get from having joint accounts. It could also be harder to pull off gifts for each other if your partner can see every purchase you make.

Pros and cons of separate bank accounts

Keeping separate bank accounts instead of a joint bank account can be helpful for many couples. “If there are concerns about limiting spending, there is a lack of concurrence on spending, or there are some complexities that are best addressed through having separate accounts, this path is worth considering,” Burton says.

However separate bank accounts can also make it harder to take care of shared expenses, like bills. Let's look at the pros and cons of keeping separate bank accounts:

Pros of separate bank accounts:

Autonomy: With separate accounts, you don’t have to justify every expenditure, which could help create more harmony in your relationship. “Some marriages might benefit from keeping accounts separate,” Burton adds. “For example, in second marriages where finances might be more complex and if they have children from a previous marriage.”

Protecting individual assets: Separate accounts can be a way to keep a portion of your finances separate if you’re in a situation where one person brings a lot of wealth or debt into a partnership. However, it’s important to note that for married couples, while separate accounts help keep things, well, separate, they may not completely protect the assets. If you’re trying to protect wealth, it’s best to work with an attorney who may recommend a pre- or post-nuptial agreement.

Cons of separate bank accounts:

Keeping track of bills: Couples who opt for separate accounts need to make clear who is paying which bill and that nothing is missed. But some couples prefer having two pots of money to choose from when covering household expenses and find that splitting bills is not an issue. 

Issues with account access: If you do have separate accounts and one partner becomes incapacitated, the other may not be able to access those assets and may actually need a financial power of attorney to do so. This arrangement can make a stressful situation even more so if you don’t have other financial documents prepared in case of emergency.

A third option: separate and joint bank accounts

Many couples choose a hybrid approach where some money goes into a joint bank account for shared expenses, such as bills and rent, and the rest goes into separate bank accounts. Depending on what percentage of their income each person deposits, having both a joint bank account and separate bank accounts can help expenses feel a little more equal if one partner makes more money.

“If there is a difference of opinion on spending limits, budgeting, and so on, a joint account plus individual accounts can be more appropriate,” Burton says. “Another benefit of a hybrid setup could be combining saving strategies while allowing some autonomy and privacy with regards to certain recreational spending.”

Burton says that couples should strategize the structure they want out of the hybrid setup, to make sure that income is disbursed in order to promote financial security of the family unit. This is where a financial planner can help you determine the best mix of accounts for you.

Whatever you decide, the most important thing is being on the same page with your partner from the very start.