Should You Combine Finances with Your Spouse's?

In recent conversations with a few of my friends, I was surprised to hear that many of them are using separate banking accounts from their spouses. Some are planning on combining their finances at some point and others don’t feel like they need to. Curious, I did a little more digging and found out that this trend is becoming more common.

About 37% of millennials are forgoing the traditional joint bank account after marriage and are opting to keep their finances separate. While this isn’t a majority, it’s more than double the number of Gen X and Baby Boomer couples who keep their money separate.

As with most personal finance topics, there is no one right way to do things or a one-size-fits-all answer. That being said (and I’m writing this for my friends, so hopefully they’re reading), I do believe that combining finances with your spouse is the best practice for most couples.

There are two main reasons why I believe combining finances is the way to go.

Simplicity

When it comes to managing your money, simpler is better. I don’t think I’ve ever spoken with someone who said, “Man, I wish my financial life had more moving parts.” Keeping things simple provides clarity about where you stand and reduces stress.

It’s not hard to see how having more accounts than necessary results in less simplicity. Too many credit cards, savings, and checking accounts can muddy the waters and make it difficult to track what’s going on. The more your money is spread out among multiple accounts the more likely you are to not know exactly how much you have or how much you’re spending. 

Having separate accounts also adds friction to everyday money decisions because you have to coordinate how everything is going to work together.

How do you split up bills and expenses? Does one person pay the mortgage while the other pays for food? How do you determine how much each person should pay for these expenses? How do you split it up so it’s “fair?” Who pays for dates and vacations? How do you save for future purchases like a house, a car, or college?

Instead of having to figure all of this out on a continual basis, you can have one joint checking account which both of your incomes flow into and all of your expenses flow out of. Rather than trying to decide who pays you what, you both pay for everything — much simpler. 

Transparency

Given that 43% of Americans don’t even know how much money their spouse makes, I think it’s safe to assume that transparency surrounding money is something a lot of couples struggle with.

In order to successfully manage money as a couple, you need to be open about your financial wants, goals, and worries. With a joint account, you’re both in on the good and bad details about your financial situation. You can’t hide your purchases because spending can easily be viewed by both spouses. This transparency not only makes things easy to track, but also promotes openness and better habits. Having shared finances forces conversations about money which leads to better financial decisions.

I realize that transparency is also the reason why some people don’t want to combine their finances. Separate accounts allow each partner to retain a sense of financial independence and to spend or save how they want.

If having individual credit cards or separate checking accounts makes you feel more autonomous then go for it. I would still recommend having a joint account that you funnel paychecks into and then you can divvy up personal spending cash into separate accounts. That way there’s still transparency and a discussion about how much you’re each spending while keeping your individual transactions separate. 

I hesitate to go there, but for those who think that having separate accounts may help them in case of a divorce; it won’t. Just because your name is on the account, or the deed to the house, doesn’t mean it’s yours alone. Assets are divided in a divorce settlement regardless of ownership.

Although I am advocating for joint accounts, what I’m really arguing for is simplicity and transparency with your family finances. If you can accomplish that by keeping things separate, then do what works best for you.

Typically, the same principles that lead to successfully sharing and managing money as a couple are also the same principles that lead to happy, successful marriages.

Thanks for reading!