Creating Joint Banking Accounts for Married Couples

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I was having a discussion with my fiancée the other day about finances when the topic of a joint checking account came up. Essentially, she wanted a joint checking account linked to our separate individual savings accounts whereas I just wanted to keep the status quo. The idea would be that we’d each put half of our income into the shared checking account to pay for the mortgage and other related bills (electricity, cell phone, etc.) whereas our own split bank accounts would be used to cover our individual credit cards.

The reason for not going 100% joint is that in the event something happened to the other person, the joint accounts could be frozen and the other person could lose access to it and be stuck in an even worse place (so that’s the reasoning against going entirely joint).

The reason I don’t want to get a joint account is mostly due to convenience. In fact, because I was switching jobs and my primary bank had been a credit union at my former employer, I just opened up new Bank of America accounts and was about to start the process of transferring all my bill paying information to the new BoA account. I really didn’t want to open up a joint account and do it all over again to be perfectly honest. There are also other sticky wickets involved in that half of our incomes, summed, is more than our bills and so what do we do with the excess money? Siphon it off into one of our online bank accounts and just keep track of it separately?

Personally, I’m of the school of thought where my money is our money and her money is our money. Even though the bank account may have my name on it, I don’t consider paying for meals out as ME paying dinner, I just see it as the meal being paid but I happened to sign the bill at the end. Now, my fiancée doesn’t earn as much income as I do and so she always feels like she’s not putting in her fair share so she’ll want to pay for things (it’s cute) and so I believe that in part this joint checking account is a nice way of contributing (I agree, it is). So, I acquiesced, more so because she’s the boss but also because it does make sense once I get over my laziness, in that we’d just make the new BoA checking account a joint checking account by adding her on as a signatory (or whatever it’s called) and then just deal with the other bridges as we cross them (where to put the excess).

If anyone out there has any advice (feel free to post a link to your blog if you’ve written about it in the past) I would certainly appreciate hearing some other perspectives.

{ 23 comments, please add your thoughts now! }

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23 Responses to “Creating Joint Banking Accounts for Married Couples”

  1. Eryka says:

    Why are you marrying this person? The joint accounts will no t be frozen, (I believe) if the account is an “or” ar opposed to an “and” account. IN the event of death I am thinking you make the each other your beneficiaries.

    My mama always had a separate credit union account that my daddy knew existed, but didn’t know how much was in it, but a huge chunk of her income landed in the joint account. I forsee trouble with your strategy as you move forward. Unless you have a prenup, if you live in a community property state, it doesn’t matter where you store the money, half of the money is part of the community estate.

    What are you going to do when you have kids? What if one partner gets sick? Do you want to really get in the business of classifying every purchase as a “me” versus “we” purchase? Is the plasma screen TV a “we” or a “me” both of you get to enjoy it. Is the vacation with the kids a “me” or a “we”? One of you really didn’t want to go.

    Not only that, but the rest of the entire world is going to treat your marital money as a “we.” The IRS, and future lenders.

    If I was your fiance’ I would view your desire as a lack of trust on your part, or an attempt to cheat me in the event you want to run off with a 18 year old nymphet.

    I will have a separate account, with emergency money, but if I can’t trust you with my money, I ain’t marrying you. So the real question is why don’t you trust your future wife. The excuses you are using to justify the joint account are a tad bit flimsy.

    Keep emergency ME money, but deposit your check into your joint account.

  2. RJ says:

    What you really meant to say was that “my money is her money, and her money is her money also” 🙂

    Seriously, it’s great that you are talking about this before you are married. Money is the #1 cause of argument among married people…

  3. jim says:

    Eryka: I believe you may have misunderstood me, I don’t see the money as MY money or HER money, just as our money… which is why I didn’t really feel a joint account was absolutely necessary (I’m in agreement with you).

    The reason for not wanting the joint account initially was out of convenience, I don’t really want to create a separate account and have to change all the bill paying information all over again hence our decision to just make my checking account a joint one (so all the pertinent info was the same).

    But, if you know of any 18 year old nymphets… 🙂

  4. Cris says:

    While it may seem to be taking the easy way out by not having to enroll in new online payment information, its likely your bills will change greatly once you’re married. As much planning as my wife and I thought we had done, we were still a little suprised in the little adjustments to expenses, and how that affects everything else so easily.

    Our solution was to set up a joint checking, and two savings at the same bank. From there just adding 2 scheduled transfers monthly, the same another online payee to the bills. That covered any excess, and was fair to including both savings accounts.

  5. Randy says:

    We’ve been married for six years.
    The first couple of years I resisted joining everything (more out of a resistance to change than any other reason, or so I thought at the time) but eventually we put everything into a joint checking, savings, and brokerage account (E*trade) plus we consolidated to one credit card that earns airline mileage.
    For us, it has been extremely valuable.
    We can take advantage of higher minimum balances to get higher interest rates in our accounts. We leverage a single airline mileage program that ends up giving us a pair of free tickets every year (and thus a nice, low-cost vacation). We make better decisions about when we can make big purchases (and even little purchases) because we can see everything under “one pane of glass.”
    Plus, it really eliminates impulse purchases when you know, technically speaking and hypothetically speaking, that you really are spending money from “our” bucket and not “your” bucket.
    If some part of your mind is holding out, ask yourself the hard question about why. It may be that what you really want to preserve is the right to impulse buy. It’s not worth it.
    Oh, and the “extra” income that doesn’t get spent? It goes to the brokerage account that we can both see and watch grow. And since we both see it, we both work hard toward making sure there is plenty of extra every month to get transfered over.

    Hope this helps.

  6. CK says:

    As a married persona myself I’d encourage you to go joint all of the way. If trust is not an issue, which I don’t think it is (and if it was you’d have bigger problems then checking accounts), what’s the advantage in going with solo accounts, leaving setup issues aside? I can see plenty of problems/annoyances. If you have seperate accounts you’re still leading seperate lives in some sense. Remember you’re entering into a marriage, not a joint venture. I concur with a lot of what Randy said as well.

  7. Rich Slick says:

    I’ve been married close to 10 years and we’ve tried it both ways and the system that works best (for us) is for each of us to manage our own finances.

    Issue 1.
    When we had a joint account and both of our paychecks went into one account, there would be days when we had 10k to 18k in our account. Feeling rich, we both spent money only to see the next balance end up at $300.00. There was never any real effective way to communicate EVERY single expenditure that would take cash out of this account. Once you have kids and there are all sorts of expenses that keep popping up like soccer fees, swimming lesson fees, karate lesson fees, dry cleaning, etc you’ll know what I’m talking about.

    Issue 2.
    When you have a single account there is a tendency of a person becoming the “caretaker” of the finances while the other becomes somewhat indifferent or less attentive to their finances. One of you will likely defer to the other if you both aren’t actively managing your finances.

    Issue 3.
    Let’s face reality here, over 50% of marriages end in divorce and while I hope this doesn’t happen to you, should it happen you will both need your own credit histories and financial accounts. Often, it is women who end up losing the ability to acquire credit after a divorce because of the lack of adequate credit history.

    We settled on a happy medium of who pays for what. I pay all housing and insurance costs (mortgage, medical, utilties, phones) and the spouse pays for all her and the kids expenses (day care, private school tuition, lessons, etc). Our joint expenses usually are our vacations and major expenses.

    I would encourage you to come up with a plan BEFORE you get married that you can both agree on and realize that it will likely be subject to change 😉

  8. Karen says:

    I think the most important thing is to communicate with your fiance and pick a system that works for you both. Communication is key.

    My husband and I have been married for a little over a year – we have completely joint bank accounts and haven’t had any problems so far. It helps that neither of us are “spenders”. We also agreed that neither of us will spend more than $100 without notifying the other. Not so much seeking permission, but just so we don’t run into a situation where we overdraw the account. He pays the bills and balances the checkbook, I manage the 401(k), IRAs and other investments. It works for us.

    The other set-up that I’ve heard of working well is to have a joint checking account where ALL money gets deposited, then each of you have individual checkings and a set, equal amount gets transferred from the joint account each month, week, whatever. All bills and household expenses are paid from the joint account, and the money in the individual accounts is to spend as you wish.

  9. jim says:

    Randy – Great thoughts, thanks!

    CK – Trust isn’t an issue and in fact, Randy brought this too, I didn’t think about the inconveniences that would arise as a result of NOT having joint accounts… those headaches might be larger than the small one of changing account info is now.

    Rich, Karen – Communication is key, the only reason for separate savings accounts was because she believed that in the event of something bad (death, i don’t know what else) there is a possibility that joint assets would be frozen or something. I’ve never looked into it so I don’t really know.

    I think after some of these comments we might expand the joint nature of the accounts beyond the checking…

  10. FMF says:

    Check out this:

    Money and Marriage: A Discussion No One Agrees On

    [Edited the URL, and if FMF wasn’t my dear good friend I would’ve called this spam. :)]

  11. Him says:

    Yeah, we have a few posts about this on our blog.

    I don’t think you have to go all joint accounts or all individual accounts. We have a joint account that pays the rent, groceries, etc. We divert a a some cash into our individual accounts for our “play money,” money that we can spend on WHATEVER we want. If I want to get wasted and spend $100 on drinks, that comes out of my account, and Her can’t say anything about it. On the other hand, if Her wants an expensive pair of shoes, she can buy then without a “tsk tsk” from me.

    I’d say do whatever works for you. You can always change your mind. Just remember to communicate!

  12. Nick says:

    “Let’s face reality here, over 50% of marriages end in divorce and while I hope this doesn’t happen to you, should it happen you will both need your own credit histories and financial accounts. Often, it is women who end up losing the ability to acquire credit after a divorce because of the lack of adequate credit history.”

    That’s not really reality. It may be true if you only account for a marriage ending in death or divorce, but is that really meaningfull? Most marriages that don’t end in divorce last 20+ years, whereas divorce can happen at any time so you are basically comparing all successfull marriages that started a long time ago to all other marriages that have occured over that time frame.

  13. Amanda says:

    I think that ultimately it is a very subjective decision you will have to make. No one setup will work for every couple. My husband and I have both joint and separate accounts – it gives us some autonomy, but we are still of the mind that all of it is “our” money.

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  15. thc says:

    Jim: Eryka has it (mostly) right and you have it backwards. Single accounts would be frozen in the event of death or incapacity but not accounts titled as “joint tennants with rights of survivorship” (Jt Ten WROS). If you live in one of the nine community property state such as California, you should consider titling accounts as “Community Property WROS”.

    That’s my advice as a CFP.

    My advice as someone who’s been married for 20 years is to give up the yours/mine stuff as soon as you can and learn to trust one another with money issues. Multiple bank accounts are a waste of time and a source of friction.

  16. Matt says:

    My fiancee and I have a somewhat complicated arrangement. There’s my money, there’s her money, and there’s also OUR money. We already have a prenuptual agreement executed, with a rider describing how our relative stakes in the house we’re buying will be divided up if we split. (The house gets sold, with the proceeds being used to first pay off any remaning mortgage, then repay her contribution to the down payment in full, and then the remainder split between us pro-rata according to the proportion we each contributed to mortgage payments and house-maintenance costs.)

    On the other hand, we both have more to protect than a lot of marrying couples. I own three profitable-but-illiquid businesses. She has a high-six-figures inheritance, two other houses, and a big chunk of undeveloped real estate in a still-expanding region. All these contracts and arrangements do is codify the declarations we’ve already made to each other…that I’m not in this to steal the cash her grandfather left her, and she’s not in this to steal the fruit of my ideas away from me. Such declarations, however heartfelt in good times, tend to get forgotten when/if things fall apart. Losing her would be painful enough…I don’t want to have to lose everything I’ve spent my life building and start over from scratch as well, if she ever decides she doesn’t love me anymore.

    I don’t assume our system would necessarily work well for others. For example, if your wife or wife-to-be has a serious jealousy issue, she might object to the concept of you having some seperate funds.

    But I will say that, to not have sufficient jointly-held funds to cover ordinary expenses would be, to me anyway, a sign of a lack of financial commitment. My fiancee and I already have a jointly-owned checking account, and once we’re living in the same house, it’ll be the primary avenue for household cashflow. As far as I’m concerned, the only thing to buy with seperate funds is gifts, and things big enough (and personal enough) that you’ll expect to take them with you in a break-up.

  17. 2 million says:

    My fiancee and I began our initial conversations about this very topic this weekend. We all have plenty of time and figured we would take the first step by opening a joint savings account to save for future vacations.

    I am really perplexed by the whole thing – it would be nice and easy to make everything joint – luckily she and I are both not big impulse buyers, but I think we are going to take it slow – after all we got probably at least a year for the engagement to work through all this stuff.

    I have also had my eye’s opened this week about our savings differences – I went “crazy” when I found out my girlfriend hadn’t been contributing to her Roth IRA – I made her sign up for a monthly contribution plan of $50 to at least make sure she was putting some retirement money away.

    I think small steps are the key at this point.

  18. john doe says:

    I found the best solution for us (married less than a year) was to have both of our paychecks direct deposited into our joint money market fund (after 401k deductions obviously). From there we have money, in the amount of our monthly budget, automatically deducted to our checking account. Additionally, we have money automatically deducted on a monthly basis to our Roth IRA’s. We keep all of our accounts (MMF, Roth IRA’s) except for the checking at Vanguard (Vanguard doesn’t have checking accounts). The checking account is free and doesn’t require a min. deposit (we use State Farm). The best thing about this set up is that any money excess of what are expenses are is automatically left in the MMF as savings and earning the highest interest rate. For example, say our paychecks deposited into the MMF are $6k our expenses are $4k and our Roth IRA contributions are $500 each ($1000 total/mo), at the end of the month we have $1,000 left in the MMF that doesn’t need to be transferred to savings. This will be particularly useful if you have a variable income, as we sometime do, because the extra money would be automatically left in savings. I hope this was helpful.

  19. whattodo? says:

    In a dilemna, been married 17 years and first 10 years had all money together into one account, paid the bills and what we had left we put some into savings and then the rest we decided together what to do with it, have fun, vacation, etc….but now in the last 7 years we have both been self employed and have two seperate businesses. We each have certain personal (like household) bills we are responsible for paying out of our business accounts and because of this it has torn us apart. Our goals are different and seperate and it is hard when one of us is doing better in business in some months and other months might be slow times, how can we adjust so that when one is struggling to make the bills it is fair. We fight all the time about it and it’s like we each don’t know what is going on with each others money. It’s creating a huge problem and now we want to get on track and are trying to resolve if we have a joint personal account where we each put in a designated amount, maybe a percentage of what we make per check (since they vary) then pay all household bills out of that account and what is left is to be kept for emergency or a percentage put into retirement account. We are just so lost and need help with any ideas that are available.


  20. jim says:

    Depending on how your companies are structured, you can still do a joint account. If they’re both sole proprietorships, just lump them back into the same account. If they’re corporation, I don’t know if that is possible, let alone even a good idea.

    I think you need to sit down and talk with your spouse because the issues you mention don’t really have to do with where the money goes.

  21. newly says:

    we just got married and our thinking is that a financial plan should fit the personalities involved. personally, i tend to be somewhat controlling about finances (big saver, very practical) whereas she tends to be more impulse-oriented. in order for me to not be as controlling and her to be more thoughtful of her spending, we’re planning on each having a separate savings account, with a percentage of our salary going to a joint account (i say percentage because it’s the only fair way to divide when one person makes significantly more than the other). the joint account will finance rent, utility bills, and other mutual expenses (basically anything we mutually enjoy like vacations etc.). i’m sure there will be grey areas where it’s not clear whether something is joint or not, but that’s where understanding and maturity are required. at the very least, she can learn to manage her finances and i will be far less judgemental since it’s her money she will be spending on personal things.

  22. Natalie says:

    Thank you so much Jim for opening this dialog! It has been extremely helpful to read through everyone’s ideas, thoughts, and concerns.

  23. Natalie says:

    Reply to NEWLY – my husband and I have been married for a year and a half now and currently have our finances set up the way you state you want to organize yours. I really encourage you to reconsider. We’ve had an extremely difficult time budgeting, paying bills, and communicating about our finances with this method. We initially tried separate accounts with a joint account that would receive a portion of each of our paychecks for all of the reasons most people state: I want control of my money because I make more, he has more expenses that I don’t want to be responsible for, it’s safer to keep things separate if something happens to one of us, etc.
    What we’ve discovered, though, is that whether or not I make more money or he spends more doesn’t matter. We actually have less control over our budget doing it this way and it’s creating a lot of frustration.
    So, I’ve been searching for thoughts and ideas on what other people do. This is what we’ve decided from all of our research:
    First, we will have a joint checking account that both our paychecks get deposited into. From here we will make ALL payments so we can follow ONE household budget for all recurring expenses [rent/mortgage, utilities, cell phone plans, student loan payments, car payments/insurance, etc.]. Yes, that means I’ll be paying partly for his student loans and he’ll partly be paying for both of mine. But we both knew what we were getting into before we got married so it doesn’t matter where the money comes from – it will be easier to budget this way.
    Second, we will have joint savings account/s that gets a portion transferred to it each month from the joint checking for house savings, vacations, emergencies, etc.
    Third, we will each have a separate checking account that gets a monthly portion from our joint income [5-10% – we haven’t decided yet] This is for each of us to do whatever we want with – spend or save – without the other getting frustrated or mad about it. I have a friend who calls this their “slush funds” but really it’s a monthly allowance for each of you.
    One of us will be assigned as the ‘household financial manager’ to keep a regular eye on the joint accounts and make sure everything is in order, but of course we will still keep a running dialog over our joint accounts. We will then each be responsible for our individual accounts.
    Again, this comes out of a year and a half of frustration trying to manage a budget starting with separate accounts and money transferring to a joint. REALLY difficult – even for a banker which my husband used to be! The present plan is a combination of ideas from our own experience and information we’ve gleaned from financial professionals and other resources.
    Hope this helps or at least gets you thinking about other options for your financial organization!

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