I am often asked my opinion regarding separate or joint accounts for couples. Throughout the years I have seen couples that insist everything stay separate and other couples that put everything in one account, sharing everything. What I have seen work best for most couples is a combination of the two. This is for financial and emotional reasons.
The Black-Hole Checking Account
Many couples that combine everything in one checking account usually have a high level of trust with each other, however, this arrangement can have negative financial results. With this system there is usually little accountability and the money is almost always spent leaving the couple living from paycheck to paycheck.
Keep Everything Separate
This option can help a couple see who is over-spending or not saving (that is if they share their finances with each other). If they don’t there is absolutely no accountability and this can be dangerous! This also shows a lack of trust. I often see this on a second (or third) marriage, when one partner has been burned. This is understandable, however, not the best option for building a long-lasting relationship built on trust or creating financial goals and dreams together with accountability.
Yours, Mine and Ours
I use this system personally and recommend it to my clients. There is a combined checking account used for fixed household expenses, and to fund short-term and long-term goals and dreams as a couple, like retirement, a new house or a vacation. There are also two accounts (one for each partner) that is for his or her personal wants. My husband and I fund these from our main checking account, where all income goes first, then fund our separate accounts equally. I believe this should be done regardless of who makes more income. This account can then be used for items that must be mutually agreed on. My account is used for clothes, hair, etc. Gone are the days of hiding new shoe purchases from my husband! He on the other hand can go play golf without the dreaded explanation of how much he spent.
This system has been liberating for us, which is one of the reasons I like it. It has also made us more accountable to each other, and disciplined with our savings goals. It took us some time to work out the kinks and what works for one couple may not work quite the same for the other. I do however, believe some interpretation similar to this is the most effective for long-term financial harmony.
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