One of the questions some of our friends asked us when we got married was if we were going to have separate or joint bank accounts. This was a question we had never really thought of before because both of our parents have joint accounts. It’s just what married people do after all–or so we thought as 25% of spouses don’t have a joint account.
In this post, I layout the 5 reasons why us spouses have joint bank accounts.
1. We Remain Financially Accountable to Each Other
Marriage is the meshing of two lives to create a single new one. Since we’re both living under the same roof and have the same bills, we use one personal account to deposit our paychecks and pay our monthly bills from.
Because the left hand knows what the right hand is doing–metaphorically speaking– using a single checking account to track our income and expenses is essential to thriving while only making $35,000 a year.
Yes, we each have a small side account that we use to buy gifts for each other so we don’t give away the surprise before Valentine’s Day, birthdays, or Christmas, but this spending comes to maybe $300 a year. As a whole, we don’t have to worry about either of us coming home with a new car we purchased on a whim. Pooling our money in a single account keeps us accountable and on the same page so there are no money surprises.
2. Immediate Access to Cash in an Emergency
Do you remember saying, “..for better, for worse, for richer, for poorer, in sickness and in health…?”
We got married in our 20s so medical emergencies were the furthest thing from our thought process when we tied the knot, but life happens and one of us will need immediate access to the bank accounts at some point and time.
After we returned from the honeymoon, adding our names to each other’s bank and investment accounts is one of the first actions we took. It took a trip or two to the bank and a few documents to sign, but both of us have full access to our bank accounts so we can make a large cash withdrawal to pay a medical bill at a moment’s notice if necessary.
Don’t forget to update your beneficiaries on your life insurance policy and 401k and IRA accounts too.
3. Painless Budgeting
In addition to full financial transparency and immediate access to large sums of cash to handle an emergency expense, maintaining one account is easier than keeping two accounts. Once a week, we log into the checking account website and balance the checkbook. It takes 10 minutes at the most because our budgeting process is streamlined.
Free programs like HoneyFi make it easier to monitor multiple bank account as each spouse can add notes to a transaction using the phone app so the other spouse can see them on their HoneyFi app too. Personally, my wife and I both like to keep our lives as simple as possible.
Here’s an analogy for you. Keeping all our money in one account is like Algebra I. Paying your bills from multiple accounts is like Algebra II. My wife and I crave simplicity and Algebra I is a lot easier than Algebra II.
4. Tracking Common Money Goals
My wife and I have the same money goals. That’s a good thing because we’re married and we love each other and our children.
Some of our money goals include getting out of debt, buying an investment property, and buying a new-to-us vehicle with cash.
Having separate bank accounts is the digital equivalent of burying coffee cans full of money in the backyard; you know it’s there but eventually, you might lose track of how many cans you buried.
With one bank account, we immediately see our lump sum savings (I’m keeping our emergency fund out of this factor because we don’t touch that money unless we have exhausted our everyday bank account). Our bank lets us create subaccounts so we transfer money into these other accounts if we want to dedicate funds to buying a new car or going on vacation.
While we enjoy lump-sum investing, we still like itemizing our account for money goals so we don’t see a total balance of $6,000 and think we have money to burn on something we’ve been wanting like a new washing machine. Instead, we spent the money we were setting aside for summer vacation because we forgot about that savings goals.
If you’ve never used subaccounts before, ask your bank if they have that function. It’s free and it saves a lot of headaches.
I recommend Capital One 360 for the subaccount capability too.
It Makes Investing Easier Too
So far, I’ve mostly focused on joint bank accounts. But, I also highly recommend having a joint investment account too.
By law, you can’t combine you and your spouse’s 401k or IRA accounts together, so keep a mental note on which brokerage maintains these accounts so you don’t forget about them.
I waited two years to combine my our investment accounts because I forgot she had one since it was managed by a financial advisor, but I wish I had done it sooner. This is mostly because my wife had a (in my opinion) lousy money manager that had her portfolio invested 100% in bonds; I’m not joking here. I never imagined a financial advisor would put a 23-year-old in a portfolio intended for retirees.
Thankfully, I transferred it and exchanged the bond funds for a stock index fund before the phenomenal 2017 bull market so her money could ride that wave, but for the four years before and she ended up losing money because of the annual account management fees.
Take the time and try to keep all your non-retirement investments with a single brokerage like Fidelity, Schwab, or Vanguard.
*I do have a guilty little confession and have a $600 account with M1 Finance as a “micro-investing” (gambling) hobby because I can buy fractional shares of individual stocks without paying trading fees. It’s more aggressive than my regular investments so I take more risks because it’s money we can afford to lose.
I think every couple should use a primary bank account to deposit their paychecks and pay their regular monthly bills. Having a single account makes money management less time-consuming and less stressful. If you haven’t done it yet, I suggest you give it a try.
Do you think couples should have joint accounts? Why or why not?