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Should Married Couples Combine Finances?

Posted By Jim On 04/09/2007 @ 12:19 pm In Personal Finance | 103 Comments

Not by default. Married couples should do whatever it is they feel is right for them and their situation because everyone’s situation is different. For me, the answer to that question is yes. Many people always jump to the issue of trust whenever talking about combining finances because they assume that if you trust one another then you would combine your finances. If you trusted one another, you wouldn’t require a prenuptial agreement. If you trusted one another, you would have separate bank accounts and you wouldn’t draw the line so clearly.

The problem with that line of reasoning is that it’s not that simple anymore and to boil down a financial decision into an emotional one is a bad decision. There are many emotion independent reasons why you should combine finances and there are many emotion independent reasons why you shouldn’t, I’ll outline them both and then let you decide which is best.

Here are some reasons why married couples should combine their finances:

1. It’s just easier

Having two of everything is terribly inefficient. If you wouldn’t want to separate milk cartons or egg crates in the fridge, why would you want two bank accounts or two brokerage accounts? The simple fact is that dealing with one of something is much easier than two of something and you can remember one thing better than you can remember two of something, such as credit card bills. By reducing the number accounts, you simplify your life and reduce the number of potential errors.

2. Fewer accounts mean higher balances, better returns

Many banks and brokerages have low balance fees or better rates for higher balances and so there is a true financial incentive to pooling your financial resources. While some of the low balance fees are really low on a relatively scale (like $3,000 for some Vanguard funds), by pooling your finances you have a chance to get in on the investment a little bit earlier. Also, some accounts offer higher returns for larger balances. Again, you can take advantage of this earlier if you pool resources.

Here are some reasons why married couples shouldn’t combine their finances:

1. Building credit history

This is an acute problem for men and women who relied on their partner to handle the finances and then find their lives without that person due to death, divorce, or some other reason. If every bill was in one person’s name, the other person wasn’t building credit history. Now, you might say that this is only a problem if you think you’re going to get divorced but that’s not a good approach because there are any number of reasons why you would be separated, temporarily or permanently, and so both sides should be building a history.

2. Access is restricted in probate

If one spouse does die, the accounts with their name on it will likely be frozen until the courts can settle the estate. This is the second biggest reason why you should at least have some money in an account with only one spouse’s name on it – they can access it during this unfortunate time.

Those are the two biggest non-emotion/trust related reasons for both cases and I think each side has valid points. Now, as we all well know, life isn’t black and white. You don’t have to split it entirely down the middle and you don’t have to pool it all, you and your spouse can decide that you want to pool 80% and keep 20% on the side – remember, in this stage of the game, you decide what’s right for you. Thoughts?


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