When you’re in a committed relationship, you share your life with your partner. Sometimes you want to do everything with your partner. Sometimes you just need a little space too. 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. But here we run 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 but might complicate things if you have different spending habits or want to buy each other gifts. Here are the pros and cons of sharing a joint bank account:
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.
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 be a good way to combine and grow your money to work toward your common goals. They can also help couples keep each other in check on spending habits.
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. If all of your money comes from one pot, you might feel the need to discuss each item you buy with your partner. Talk about how you want to handle purchases so there are no surprises.
Buying gifts. It could be harder to pull off a secret gift if your partner can see every purchase you make. (Psst … using cash might help get around this.)
Pros and cons of separate bank accounts
Keeping separate bank accounts instead of a joint bank account can be helpful if you have different spending habits or levels of debt. 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.
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. On the flip side, some couples enjoy having two pots of money to choose from when covering household expenses and find that splitting bills is not an issue.
Harder 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.
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, like 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.
Whatever you decide, the most important thing is being on the same page with your partner from the very start.