Separate Bank Accounts in Marriage Might Make Sense in These Situations
If you’re married or living with your significant other, there’s a lot you share. Your home. Your weekend plans. Perhaps even a kid or two.
But just because you’re sharing a life together doesn’t mean you have to share the same bank account. Having separate bank accounts in marriage or a serious relationship may be the perfect solution to harmonious money management.
Having separate bank accounts isn’t an indication that you’re not connected as a couple. In fact, there are plenty of valid reasons why a couple might choose not to merge finances.
6 Reasons Why a Couple Might Want Separate Bank Accounts
1. You want to quit being sneaky about purchases.
2. You have different income levels.
3. You have different spending habits or money management styles.
4. You’re used to having financial independence.
5. You’ve been burned by a former partner.
6. You want to protect assets for your children.
1. You Want to Quit Being Sneaky About Purchases
When you share bank accounts with your significant other, they see every time you swipe your credit card, spring for an online purchase or make a withdrawal from the ATM.
Sometimes you might want a little financial privacy — whether you’re trying to surprise your honey with an anniversary gift or you just don’t want them to know exactly how much you spent on a new pair of shoes.
The Penny Hoarder conducted a survey on people’s budgeting and spending habits and found that nearly 1 in 4 respondents said they’ve kept a purchase secret from their significant other in fear of how they’d react.
Keeping significant financial secrets from your spouse — like racking up a bunch of debt on secret credit cards — can be harmful to your relationship. However, if you just crave a little autonomy to spend money (responsibly!), having individual accounts can help.
2. You Have Different Income Levels
If you earn significantly more than your partner, you might get frustrated to see them spend your hard-earned cash on purchases you don’t agree with. If you earn less, you might be bothered feeling as if your partner is micromanaging your spending.
You can avoid feelings of resentment or annoyance by coming up with a fair way to split the household income and shared expenses — and then letting each person have the financial independence to manage their own money how they see fit.
3. You Have Different Spending Habits or Money Management Styles
Another reason you might opt for separate bank accounts is if you and your other half have dissimilar spending habits or money management styles.
Maybe you enjoy spending money on experiences while your husband prefers to buy the latest tech. Perhaps your girlfriend finds it easier to use the cash envelope system to stay on budget while you hate carrying cash and can’t function without checking your YNAB app every day.
Rather than trying to convince your partner to see things your way — or getting into constant arguments about the balance of your joint accounts — it might be better to just maintain your own individual accounts.
10 budgeting apps for couples.
4. You’re Used to Having Financial Independence
As couples wait to get married until later in life, it may be difficult to adjust to merging finances after having sole control of your bank account.
“If you’re getting together in your 30s or 40s or later, you’re used to doing things how you do it and that’s what’s comfortable for you,” said Isabel Barrow, director of financial planning with Edelman Financial Engines.
Maintaining separate bank accounts may be what’s preferable.
There’s also the concern of losing your money management skills if you hand over the reins to your spouse to take care of paying the bills and handling the investments. It can be helpful for both to stay connected to managing their money individually rather than to have one partner who does it all.
5. You’ve Been Burned by a Former Partner
Past experiences can have an emotional impact on our money mindsets.
Barrow said she’ll often see couples who are in a second marriage choose not to open joint accounts or merge other assets.
“I think that a lot of times it’s just to give them peace of mind knowing that they’re free to spend and to save how they choose,” she said. “They may have had disagreements in their prior marriage about money or maybe that was something that led to the divorce, and then they’re left feeling vulnerable financially and they just don’t want to go down that road again.”
If your former partner was financially controlling or irresponsible with money, maintaining your own savings account may give you peace of mind — even if your new spouse or significant other doesn’t demonstrate the same behavior.
6. You Want to Protect Assets for Your Children
Couples who get together later in life and have children from previous relationships may choose to maintain separate accounts and assets in order to pass wealth down to their own kids.
If you want to protect inheritance money or gifts, it’s helpful to put those assets in a trust, Barrow said. Assets held in a trust are more likely to be protected from being split between spouses in the event of a divorce.
4 Tips to Successfully Manage Money Separately
Keeping separate accounts in a relationship requires a little extra work. Here’s what you need to know as you go forward with this financial arrangement.
1. Have a Plan for Shared Expenses
If you decide to keep your funds separate, you need to have a plan for how you’ll handle shared household expenses.
“Every couple needs to have a system that works for them,” Barrow said. “Once you find it, stick with it.”
You might decide to have each partner cover a particular set of bills. For instance, your spouse might take care of paying the rent and student loans while you cover child care and groceries.
Another option is to split the bill for everything. Money transfer apps like Venmo and Cash App make it easier to reimburse each other for shared expenses. However, Barrow finds that constantly splitting the check can grow tedious and lead to bickering or resentment.
What she recommends is for couples to open a joint bank account for shared expenses while each maintaining their own separate accounts. The amount of money each contributes to the joint account should be based on the percentage of the combined household income that they earn.
For example, if you make $60,000 and your partner makes $40,000, you should cover 60% of shared expenses while they contribute 40%.
2. Keep Important Accounts in Both Names
Even if you pay the bills separately, it’s important for both people in the relationship to be named on the mortgage or rental agreement — especially if you’re unmarried.
“If … you’re not married and [the home] in one person’s name, there is a chance that if the one whose name is on the mortgage passes away, the unmarried partner can get booted out of the house,” Barrow said.
The same rule applies to utility accounts. You don’t want to break up with your boyfriend and also have your electricity and water cut off, because he was the only one listed on those accounts.
However, if you have Netflix in your name and your significant other is named on the Spotify account, it’s not as crucial to make sure those subscriptions are in both people’s names.
3. Separate Accounts Won’t Necessarily Protect You if You Split Up
Just because you have money put aside in your name only, your spouse could have rights to those assets in the event of a divorce.
For married couples in community property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — all assets and debt are considered shared marital property and are generally divided evenly in a divorce, regardless of whose name is on the account.
Most states are equitable distribution states, which means that assets acquired during the marriage are to be “divided fairly but maybe not equally,” Barrow said.
Entering into a prenuptial agreement before you get married means you and your spouse can mutually agree on how you’d want their assets divided instead of being subject to state laws.
4. Take Time to Plan for the Future Together
When you and your spouse manage finances separately, you may not see your overall financial picture as clearly as couples with a joint bank account.
That’s why it’s important to have open conversations about money and to be on the same page about financial goals. If you are married or in a committed relationship, you should know how much money your partner makes, what debts they have and what their spending habits are like.
Make financial transparency a regular part of your lives by implementing a monthly money date or family budget meeting.
“Even if you’re keeping the money separate, you should be planning together,” Barrow said. “You need to together determine what your spending limits should be or what your savings goals should be.”
Nicole Dow is a former senior writer at The Penny Hoarder.