Joint or Separate Checking Accounts?

Tips on How to Decide and How to Make It Work

Couple sitting on a sofa with a coffee table holding files and a laptop balancing their checking account
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It's not necessarily a given that newly married couples will merge their individual checking accounts into one joint checking account. Finances are often complicated by previous marriages, child support or alimony, student loans, existing mortgages, or credit card debt. Also, the couple might want a sense of autonomy and financial independence.

Combining checking accounts can simplify money management for married couples. But it can also make it more difficult. Sometimes combining all income into a joint checking account can muddy the waters, add confusion and complications, and cause resentment and power struggles. So what's a couple to do?

Before you tie the knot, talk about how you'll mingle your money. Calmly express your opinions and discuss the ramifications of the different options.

One Joint Account

One option is to each put all of your earnings into one joint checking account. With this system, you both add money to the account, and you both spend and pay bills from the account. The amount you each contribute or spend depends largely on how much you each earn, your expenses, and how you divided household expenses.

If you're both comfortable with this approach, it's certainly the easiest logistically. But if one of you is deeply in debt or is notoriously bad at keeping track of checks and ATM withdrawals, this may not be the best method for you.

The One-Two Method (One Joint Account Plus Two Separate Accounts)

Instead of a single checking account, some couples establish a joint checking account while retaining their separate checking accounts. They each pay an agreed-upon amount monthly into the joint checking account and use this account to pay the household bills. Meanwhile, they use their individual checking accounts to cover individual spending.

One of the big advantages of this method is that each person retains autonomy and financial independence, which helps avoid the use of money as the power in the relationship. There's no one looking over the other person's shoulder or questioning purchases.

If the one-two method is used, come up with a method of determining how much each of you will contribute to the joint checking account. 

  1. Set up a budget so that you know what your shared monthly expenses are and how much will need to go into the joint checking account.
  2. If you both earn about the same amount, it makes sense to each contribute the same dollar amount to the joint account. If one of you earns substantially more than the other, it's fairer to contribute on a percentage basis. For details on how to calculate your contributions based on the percentage basis, see the example at the end of this article.
  3. Set up a joint savings account that each of you contributes to for your shared financial goals, such as saving for retirement, investing, buying a new vehicle, taking a vacation, and paying for your kids' college educations.
  4. Continue to pay your pre-existing credit card debt, student loans, and other financial obligations from the personal checking accounts.

Which to Choose?

Neither of these methods is right or wrong. Resentment over money can fester and eventually poison a relationship if it's not addressed in a way that satisfies each partner, so what's right is what works for you as a couple. For your long-term relationship, you both need to feel good about how the money works in your relationship.

Example: You earn $25,000 per year. Your spouse earns $50,000 per year, for a total of $75,000 joint income. Determine the contribution by performing the following calculations:

  1. Add your annual income to your spouse's annual income.
  2. Divide the lower salary by the total combined salaries to get a percentage for the lower-paid spouse. $25,000 / $75,000 = .33 or 33%
  3. Multiply this percentage times the dollar amount you need in the joint account monthly to pay your shared bills. This amount is the lower-earning spouses' monthly contribution. .33 x $3,000 = $990.
  4. Subtract this amount from the dollar amount needed in the account monthly. It is the higher-earning spouse's contribution. $3,000 - $990 = $2,010.

Doing the math this way can establish an element of fairness in how you are approaching household budgeting. But it's important to be clear about how that distribution works when it comes to things like saving and paying down debt.

If one spouse is carrying a large volume of student loans, for instance, but they're the lower-income earner, consider how that would affect the budget. If you're making substantially more and have no debt, would you consider paying more of the household bills so they can pay the loans off faster or offer to help with their debt repayment?

The same idea applies to savings. You both may have savings goals, but if one of you makes far more, should you automatically save more in your joint accounts? Or, should you choose a set amount to save that's workable for both of you, based on your income? You can apply this to both short-term savings goals, such as building an emergency fund, as well as long-term savings goals like retirement.

Having these kinds of discussions can help both of you to feel good about the decisions you're making with your money. When both spouses have a voice in household money management, there's less room for disagreements to arise.

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