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Joint or Separate Bank Accounts?
I was just wondering how other couples handle their finances. We've been together for almost four years and got married last year. So far our finances are completely separate. It seems to be working but we are just renting an apartment right now and we don't have children. We've discussed it many times but we really haven't come to a decision on how we should handle our finances. We seem to have the same spending/saving habits and money is never an issue but I'm afraid it will be in the future when we have a mortgage and children. I've spoken with my friends and they say they all love having joint accounts because their husbands make more money (they're joking, I hope) but really don't give me enough useful advice to make me think that joint finances are the way to go.
How do you handle your finances and what seems to work best for you? What are issues that you've ran into?
Re: Joint or Separate Bank Accounts?
MW and I have our separate accounts from before we were married but when I moved in 5 years ago we did create a housing joint savings for emergencies that is mainly for the house. Since then we have gotten married and had a child. We still have our separate accounts with me transferring money to MW to cover joint bills. Our system works for us and we have been for the last few months actually looking at a monthly budget and seeing what "surprises" are coming up.
You and your husband should sit down and talk about the system that you think would work the best especially for joint emergencies and a child fund.
First of all, change your screenname immediately
Not safe to have your names out on the interwebz like that. Now on to your question...
We've done both and I can see the advantages and disadvantages of both. Ultimately, you and your husband need to decide what's best for you but this is the evolution of our finances:
DH and I dated for six years before getting married and lived together for three. I was adamant that we keep everything separate and equal (us paying 50% of everything regardless of income). After we got engaged, we set up a joint savings account but that was it. My cousin had made the mistake of joining finances and taking on debt with a past boyfriend. He left after emptying the accounts and leaving her with all the debt. Not a good situation and I wasn't going to set myself up like that (not that I thought DH would ever do that, but you just never know...)
Anyway... fast forward to after we were married, we still had separate finances because well we were just too damn lazy to combine everything. DH was making about twice what I was so he took care of the mortgage and a few other bills from his account and I took over a few from mine. It worked out fine but I knew it wouldn't last in the long run. What about when we have kids? Who was going to pay for what? It just didn't make logistical sense for us.
About 6 months after the wedding, DH took a massive paycut at work (more than 50%) so the separate finances just weren't working anymore because he was barely covering all "his" bills. Not to mention I was going crazy because I stress about money and not having a clear picture of our finances was causing me anxiety. So we closed our separate bank accounts, opened new joint ones and have been happier ever since. It works well for us because I can see all of our money at all times and know we are fine. It works well for DH because he doesn't feel responsible for the mortgage anymore.
We have individual credit cards--nothing joint there. We each pay off our cards each month and didn't really see a reason to have joint cards at this point. We trust each other that we aren't spending what we shouldn't plus we didn't want to take the credit hit by closing long standing cards or opening new cards when there wasn't a need to do it.
I don't think DH would have been as gungho about the joint accounts if it wasn't for his pay cut but ultimately it's working better for us. But like I said, you guys need to do what works best for you. Don't let your friends or people on a message board guilt you into something that isn't right for you.
The issues we've run into is that DH is a spender. And I've put a significant cap on his spending. While he admits it sucks that he doesn't have the free reign on his spending like he once did, he realizes that we have bigger financial goals now that I am keeping us on track for. We have far fewer arguments about money now that we both have access to everything.
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In a Suze Orman book I read she said that instead of doing a certain amount of money you do a % of each of your take home pay. That way the person that makes a little more, a little more comes out of theres so the person that only makes a small amount doesn't get left with such a tiny amount. I hope that made sense!
I think it is up to you how you do it. I personally have discussed this with my boyfriend of 4 years and currently we have seperate accounts but eventually we plan to get a joint account and each of us put for exp $400/mo. SO that if ..god forbid, we ever split, we just split the money down the middle. We don't intend to do a joint account until we are married though. We would also still maintain our personal accounts- he is military and USAA has a lot of great benefits etc. And I am the type of person that likes to have my own money and spend it how I want it.
Whatever you do-get on the same page about it!
We started of with seperate accounts. Every other week I would have to remind DH to transfer money so I can pay the mortgage or any other bill. Maybe 3 months into us having the house he decided to close his account and we kept mine. Of course I added his name to the account so he has access also.
I take care of all the bill paying in our house and I find it to be much easier that way. We have small individual savings accounts that we kept. But for the most part, everything is combined.
We were older when we married (50's), and each of us has a house and separate financial responsibilities, in spite of the fact we live together in my home, now "our home". We had to get a joint savings account to deposit our wedding checks which were made out to both of us. But that is the only joint anything we have, and it has a minimum balance which is never touched for anything. It's just "there", LOL. Each of us pays for our own financial responsibilities as he has had to keep his home because it's worth less than the mortgage and has to cover those bills. I'm simply paying for what I'd be paying for anyway, which is the expenses I've had for the past 18 years in this house.
I always think it's a good idea to keep some finances separate under each of your names. Doesn't have to be a huge sum of money. Your spending and saving habits may be the same now, but things change, and a woman should never be without credit and bank accounts in her own name. When you go to buy a home, they'll run credit checks on your social security numbers, so all accounts and credit histories going backward will show up.
I like the Suze Orman comments above, where each married partner deposits a certain percentage of their checks into a joint account. Most companies today (but not all) have direct deposit capabilities, and the deposits can be split between different accounts, up to 3 in some cases.
In the end this entire issue is based on conversations you have with each other and how you decide to do it. It's based on trust and how much control each of you wants over their financial independence. There really are no right or wrong answers.
@MrNibbles
Lurker here. DH and I had separate accts for several years of living together, and our first year of marriage. It worked ok, but we needed to start saving for a house and kids, so we decided to combine. (plus, it was getting difficult with the "I paid this bill so you owe me x, but then you paid that bill so it equals x")
Now, we direct deposit 85% of our paychecks into a joint acct, 15% into personal acct. I personally think it's important that each person have their own acct and spending money that they can do whatever they want with, and don't have to answer to anyone about how they spend it.
I make more than DH, so I get more in my personal acct. DH does not have an issue with it, and I know that if/when I drop down to PT when baby comes, I will have less personal spending.
We kind of have both. DH has his account from before we were together, and I have our savings linked to my card only, as I'm the saver and budgeter.
We combined accounts as soon as we moved in together. Our pay cheques go into, and bills and spending come out of our joint account. H's other account is to "put money aside" ie. we take money from our account and put it toward rent in that account each week, just to hold it, and transfer it over on the first of the month.
This works for us.
I posted this same question awhile ago and I'll just sum up our situation again. We've together for 6 yrs total, lived together for 5 years, and married 9 months. We've always had seperate accounts and credit cards. We have the same view of money overall so we don't have any debt and aren't big spenders, but wish we could save more. We currently just split the bills and pay half each from our own bank account online. It's quick, easy and we don't have any issues with it. We get to spend our leftover money on what ever we want so we never have to argue or feel like we are controlling eachothers spending. We totally trust eachother. We've been thinking of ways to joint account and if it would be easier, but I'm not sure if we should keep our own open etc....it just seems too confusing and like more paperwork and an extra account to balance. I feel very good with how we handle everything now, but I just have a hard time with change and seeing how a joint situation would make things easier.
We do have 2 ING joint savings account, one for a house and one for vacations. We each have our own regular ING savings/emergency accounts as well, but have alos toyed with the idea of merging this one as well.
Just try to figure it out beforehand and picture how things would work...it may work or may not, every couple is different.
My H (back then he was BF) and I combined finances right when we started dating. In hindsight, there were plenty of things that could have gone wrong, but we had just moved to a new city together and I was in school/not working enough to really contribute. Then my H went back to school and only I was working. We still have separate accounts, but neither of us use them.
My H is really good at creating a budget and savings plans, while I'm better at keeping us on budget and making sure bills are paid. We sit down once a month to look at our finances and see how things are going.
My husband and I have always had joint accounts, and we pay for everything according to the budget we set up. Who makes more isn't relevant to us- sometimes he makes more and sometimes I make more, and we just think of it all as "ours" anyway.
I know some people who have a joint account where they each contribute money to cover the household bills according to their relative percentages of the household income, and a joint savings account for emergencies, vacations, home improvement projects, etc. and then they each get to keep what's left of their paychecks for themselves to spend as they want. That can also work very well.
We have joint accounts (as of December). It's working well.
We also have a joint credit card. We closed all other accounts and credit cards.
I did a year budget which covers all our expenses like mortgage, utilities and tv and phones, car payments, insurance, car registration, taxes, car services, vacation, present funds (for xmas and birthdays) savings, retirement, a $2,000 misc. buffer, etc. Basically everything that we pay monthly or yearly.
With what we have left over we allot $500 a month to household expenses (mainly groceries). We then each get $800 for spending money. This covers gas, gym, dining out, entertainment, clothes, gifts for others, etc.
I make more and my FI has a car payment but we don't do yours and mine - just all ours. So we jointly pay his car payment and we get the same amount of spending money. The only place where FI pays more is in gas (I have a prius). I usually make up for this by treating us (on my 800$) out to dinner once a month.
We don't move the spending money anywhere - we just both keep track of how much we spend on a running tally each month. It sounds worse than it actually is.
I really like this system!
This is going to sound a little controlling but it isn't. lol. My husband and I opened a joint account together a few months before we were married because we had wedding budget money that we both wanted to be able to access. We use PNC Virtual Wallet which basically links three accounts under one account. I have a checking account as well as two savings accounts that are all linked under the same account. It sounds confusing but it isn't really. Checking is where most money flows through, then the second account is where we put particular savings... for example, I'm in three weddings in the next year and my husband is in one of those so we needed to save money for bridesmaids dresses, presents, etc. and the third account is savings in the traditional sense. We both contribute 10% of all earnings, tax returns, gift checks, etc (and sometimes more) to our savings. This is all in our joint account even though I am the main account holder.
The part where it might seem controlling is because my hubby also has an account. But I do not have access to this account. Originally we each had our own accounts as well as the joint accounts but then I had issues with my personal account that he didn't have access to so I closed that account and merged it with the joint account. He still has his own account which I don't really know what he does with. He pays bills and such but I don't know what goes on with that account unless I ask him.
Before my husband got a hold of my finances though, I was a mess constantly living paycheck to paycheck and with an INSANE amount of school debt.... My entire full time job paychecks go to paying for my student loan payments (minus the 10%). He is amazing with finances and budgeting and he basically runs the finances even though I am the main breadwinner right now (he is still in school full-time until May when he will start his job and be the main breadwinner). Its what works best for us.
Just a note: we also talk about finances connnnnnnstantly. Which is a little annoying but really good because it keeps us both on track. I hope that helps. My honest advice is to create a joint account but also maintain your own personal accounts if that is what makes you feel most comfortable.
We have a savings account with ING. Each of our paychecks gets deposited into that at the beginning of the month. Then, a percentage of those paychecks (he gets paid slightly more than I do, so he transfers slightly more than I do) is transferred into our joint checking account. A percentage also goes to each of our individual checking accounts.
Then, two weeks into the month, a percentage is transferred again. So for example, if I made 2,000 dollars a month, I'd transfer 700 at the beginning of the month, and he'd transfer 1000. Then, two weeks later, I'd transfer 500 and he'd transfer perhaps 600. That way, there's always a sufficient amount of money in that account for joint expenditures (going out to dinner, paying bills, purchasing gifts, supplies for work, etc) without having to live hand-to-mouth because we know there'll be a second transfer later that month (i.e. we essentially get paid twice a month) and that leaves each of us individually with a certain amount of spending money (for me it's 150 a month; for him it's a little more) and the rest of it gets divided into stocks and bonds. We also keep an emergency fund at about 8,000 dollars at any given time.
We use the individual accounts for personal expenditures. I'm a knitter, for example, so my yarn comes from my personal account. So do any gifts I purchase for him or anything I get just for myself.
We have joint bank accounts, and our own cc's that we pay off every month.
We had anticipated having our own personal spending accounts (an allowance of sorts for discretionary spending) but never got around to it, and now we don't see the point as we have similar money mgt styles, and don't have money disagreements very often.
I do know several couples that do keep their finances separate, or at least have personal spending accounts, and the system seems to work well for them. I say whatever works, and if it stops working then modify as needed.
We started out with the Suze Orman method that a previous poster mentioned. It turned out our expenses took about 60% of our join income so wanted a little cushion/savings and rounded up to 75%. Each of us deposited 75% into a joint account and the 25% remained in separate accounts for discretionary spending. Household bills, food, and basically anything we did as a couple went onto a joint credit card, paid by the shared account and personal things like clothes or video games were on our individual cards, paid by our personal accounts. We liked this arrangement since then we can enjoy when we have raises/bonuses but also still contribute a portion to the joint account. This worked while we were dating and the first year of marriage.
Once we bought a house and was planning on a baby we decided to just join our accounts and individual credit cards so we know what our true spending looks like. It works out really well, especially now that there's a baby. I think separate accounts when trying to figure out toys and diapers gets too complicated.
Joint works for us. We combined finances when we got engaged. It was easier to manage than having separate accounts and saying, "you owe this and I owe this." We have a joint credit card and we each have individual cards. For us, I manage all the money. He says he is happy, and so am I.
We have both. I have my accounts, he has his and we have a joint. So far, no problems. I do almost all the banking (online and in person), so when I need to move money, I just do it. Because we're using my accounts (utilities, etc), I found it easier to just keep MY bill-pay set up with my bank and keep the status quo in that respect. I pay all the bills from my income and we are saving his. I like it, wasn't sure in the beginning, but I like it now. It's nice knowing we can live off of ONE income and save all that other money. Buying a house together now is becoming more realistic (sooner rather than much later). If/when we have kids, his income will have built us up a nice nest egg too, even though he makes less than me right now.
I wouldn't worry too much what others do, you have to do what works best for YOU.
For some, that's a joint account, everything in one pot. For others its not. And then there's still others, like my husband and I, that have some sort of hybrid thing going on. Personally, I like this arrangement. He likes it too because he doesn't worry about the bills and can better keep track of his own account and income. He likes seeing how much money he's tucking away for our future? and I like not having to worry about saving! LOL