Sarah Scott and Farhan Khan have a system that has worked well for them over the course of an almost 25-year marriage. They have a joint bank account, but they also maintain separate checking accounts for what they call “an allowance” to cover personal expenses.

“We deposit $200 per paycheck into each of our own separate accounts,” explains Scott. “It gives us personal financial responsibility and an outlet to buy things we value. But at the same time we wanted to grow our joint account. All expenses for our home and child, as well as what we contribute to saving for college and retirement, come from there.”

To combine or not to combine? It’s one of the most important money decisions a couple can make at the start of a relationship. We asked Catherine Principe of Associated Bank to weigh the pros and cons for each option:

JOINT ACCOUNTS

Pros:

  1. Convenience. One of the pluses of joint funds is simplicity. “It’s much easier to have one bank account to balance and monitor and one bill to pay or one certificate of deposit to renew, whatever the case may be,” says Principe. There are no other accounts to worry about, and all money goes into one place.
  2. 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.
  3. 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.
  4. 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 the fees,” says Principe. “If the bank requires $1,000 in the account at all times, your pooled money can help you reach that threshold more easily.”.
Joint accounts can be a good way to combine and grow your money to work toward your common goals.

Cons:

  1. 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.
  2. 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.)

SEPARATE ACCOUNTS

Pros:

  1. Autonomy. With separate accounts, you don’t have to justify every expenditure, which could help create more harmony in your relationship.
  2. Protecting individual assets. People who bring a lot of wealth or debt into a partnership should think about how that will affect their decision. “The plus of the separate account arrangement would be not to allow another person access to your account. I think it really depends on the relationship,” says Principe. For instance, in the situation of an inheritance, Principe advises talking to legal counsel and perhaps looking into a prenuptial agreement before deciding on whether to let a spouse access an account.

Cons:

  1. 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.
  2. Harder account access. If you do have separate accounts and one partner becomes incapacitated, the other would typically need a financial power of attorney to be able to access those assets. “We strongly advise in that situation that you work with your estate advisor or attorney to find out what would work best for you, because each situation is very different,” says Principe.

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

Recommended Reading