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Should You Have Joint or Separate Bank Accounts?

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Traditionally, when a couple gets married, they merge their money, including paychecks or other recurring income, tax refunds and, of course, cash gifts from the wedding, into one bank account. This often serves as a symbolic gesture, showing the union of two people into one unit. Having a joint bank account can also be a smart financial move that simplifies a couple’s new life together. However, joint bank accounts can also have their pitfalls, so newlyweds must weigh the pros and cons of all options before making a decision.

Benefits of a Joint Account

One of the main advantages of a joint bank account is that there is a smaller chance of encountering financial “surprises” when all money goes into and comes out of one account. Married couples with joint accounts often have an easier time keeping track of their finances because all expenses come out of one account. This makes it harder to miss account activity, such as withdrawals and payments, and easier to balance the checkbook at the end of the month.

Having one bank account also allows each spouse to have access to money when they need it. Joint accounts usually provide each account holder with a debit card, a checkbook and the ability to make deposits and withdraw funds. With banks that provide such services, each account holder also receives online access to account information and tools, further simplifying the process of keeping track of money.

Some legal affairs are also streamlined with joint bank accounts. In the event that one spouse passes away, the other spouse will retain access to the funds in a joint account without having to refer to a will or go through the legal system to claim the money. Depending on the state and local laws, the surviving spouse may have to go through a lengthy legal process to claim money in a separate account.

Drawbacks of a Joint Account

Couples may not feel comfortable with the loss of financial independence that comes with a joint bank account, especially early in the marriage. With separate accounts, each spouse maintains their own finances and is only responsible for paying their share of the joint bills. If one or both spouses feel more at ease knowing they have their own money to do with as they please, pooling the money in a joint bank account can cause friction in the marriage.

Joint bank accounts can also cause issues in a marriage when spouses fail to inform each other about their account activity. The convenience of joint access to funds in the account can also cause overdrafts and bounced checks if one partner makes an unexpected withdrawal or payment. If one spouse is less financially responsible than the other, separate accounts keep much of the damage contained to one spouse’s finances.

Problems may also arise when one spouse enters the marriage with student loans, credit cards, alimony, child support or other debt that must now being paid with joint funds. This situation can often cause resentment in the other spouse, who becomes responsible for paying the debt as well. For this reason, couples should discuss their separate debts in detail before deciding on which kind of banking works best for them.

If the couple decides to separate, the funds in a joint account can be messy to separate. Each spouse has every right to withdraw money and close the account without the consent of the other, and one party can easily leave the other penniless. Separate bank accounts prevent that scenario and can allow for an easier break that often doesn’t involve a long fight to fully separate the finances.

Other Options

Married couples can choose to maintain separate accounts and also open a joint account in which they deposit a portion of their income. This provides the benefits of a joint account and the independence of divided finances. Couples can also chose to keep separate checking accounts and start a joint savings account for vacations, down payment for a home, kids’ college tuition, or retirement.

Couples should discuss whether to have a joint bank account or not as early in the marriage as possible, if not before the wedding. Examining the benefits and drawbacks of all the options will help lay a strong financial foundation and ensure that each spouse is on the same page. Couples should also revisit their decision every so often to make sure their strategy still works for them.

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