Updated: Mar 5, 2022
This is a common question that we get a lot. Should couples have their own bank accounts? Should they have one budget or two?
Stats on Couples With Finance Management
75% of couples (From Middle Class Dad) in the US share at least one bank account let alone don’t budget. The younger the couple, the less likely they are to share bank accounts, but they also see much higher divorce rates compared to couples over 50. So the data overwhelmingly says yes; married couples should share bank accounts.
The historic divorce rate is around 50% and money is often the largest contributor to the problem.
Taken from Fintech firm called Zeta, they examined data from over 20,000 couples, with a median age of 31.
If you grew up in a single-income household, you might assume that every couple shares 100% of their resources. But Zeta’s data points to a surprising truth: More than one-third of couples (39%) keep their finances in separate accounts.
Another 39% were fully merged, or “all in” with sharing joint bank accounts, credit cards and bills. And the remaining 22% chose a “yours/mine/ours” approach with partially merged finances (allowing for individual spending while paying shared expenses from a joint account).
Zeta’s data breaks it down even further:
Of the 39% who were fully merged or “all in,” 80% were married and 16% were living together
Of the 22% who chose a “yours/mine/ours approach,” 54% were married and 35% were living together
Of the 39% who keep separate finances, 30% were married and 46% were living together
“With our parents’ generation, 70% of the time, they were single-income households, whereas with our generation, 70% of the time, we’re dual-income households,” (Aditi Shekar) tells CNBC Select.
What Couples Are Concerned About
Cohesiveness - Each person wants to feel their contribution is fair. Every person is unique and has a different set of values so it is important that both sides feel they have an equitable stake in the game. The goal is that each person sticks to what they agreed to.
Financial independence - Couples like the idea of managing their finances and splitting bills - there is a mental factor in place here. There is a sense of satisfaction in the present state and the subconscious when there is control over money. Having independence usually leads to quality results.
Disagreements on the Style of Money Management - Couples pontificate that blending their money will lead to problems if they have different money styles. The most obvious is that one person is a saver while the other is a spender.
Who Splits What Costs?
This is a dynamic topic to discuss, as it is one thing to have separate bank accounts and it brings into question: who pays for what bills? When couples get together, they typically manage their own bills for items that will be ongoing from their individual lifestyle for something as small as a Spotify account.
Who pays the rent/mortgage?
Who pays for dinner?
Do you split the groceries?
How do you save for large items or future goals such as a vacation, a car or recreational equipment?
Split rainy day and emergency funds for repairs?
How Much are You Allowed to Save and Spend?
If one person has a large income, does this mean that he/she is entitled to have more spending money or to allocate into savings?
Suppose Jane makes $75,000 and Josh makes $50,000; how do you determine this?
Or do you treat the money as one pool to draw from equally?
Credit Card Management
This is a large caveat when separating finances when it comes to the credit cards.
-Do you have joint credit cards?
-Should you have separate cards?
Having separate cards creates an inherent risk with purchasing power and overall debt management if one person mismanages money.
One person’s score can provide the ability to qualify for a large purchase such as a home. On the flipside if a large amount of debt is racked up this hamper the nest egg planning. This can easily cause dissension in the relationship.
What About Investing?
Employer sponsored matching is most important; however, how do you handle your retirement planning as a whole?
Suppose you have a joint dollar amount that you are planning for, but one person makes $40,000 and the other makes $80,000; how do you divvy that money plan up?
Is your retirement plan different from mine? The general rule is to put away 10%-15% of gross income. What if one person saves little-to-nothing and the other is a heavy investor? This can also cause dissension in the relationship.
Are we going to spend separately in retirement because one has more money than the other?
What If I Want My Own Money to Spend?
There is nothing wrong with having separate bank accounts; however, we recommend they should be used for free spending money that is allocated each month.
Hence, if you want to have privacy with your choices such as buying gifts or using it for leisure, this is understandable. In addition, each person can choose to build up their own savings from this account.