Whether you are thinking of walking down the aisle or are newlyweds who just did, a blissful marriage comes with financial baggage – baggage that needs to be unpacked. Before you make any progress, you must first ask: Where do I even put my money? Deciding if you need a joint bank account is an important initial step in creating lifelong financial health in your marriage. Often financial matters may be stressful. A recent survey found that married Americans argue an average of 4.3 times a year just about money! To help you possibly dodge a fight or two, we’ve listed the major pros and cons of a joint account that will help set you off towards your happily ever after.
The clearest benefit to a joint account is its ease. It serves as a single place to pool your income, pay bills and manage other recurring expenses. No more Venmo-ing half the rent or grocery bill to each other. A single account also ensures no one “forgets” to send over their half. Easy-peasy!
CON: Maybe It’s Too Efficient?
If there is a large difference in income and debt between partners, a joint bank account could make someone feel exploited or taken advantage of. For example, Partner A enters the account with a neat little nest egg they have been perfecting for many hardworking years. Partner B comes with five years of student loans and minimum wage pay. Ideally, if the partners communicated clearly, and A was happy to help dwindle down that debt, no issue would arise. But, if B is too embarrassed or nonchalant to communicate about the debt and A and B get a joint account….LOOK OUT! A’s money goes towards those loans. A becomes upset that the years of perfect budgeting are wiped away and you know what happens next. Transparently talking with your partner ahead of time about your financial situation and what account(s) would be best for you can help alleviate a great deal of tension over money. Schedule a collaborative consultation with a Demand Wealth advisor to help you chart your new marital financial course together.
PRO: Total Transparency
Along the same lines, a joint account goes a long way towards keeping both partners honest. Both can see exactly what is being spent and when. This will aid in staying on track with financial goals such as savings and expenditures. One study found that 65 percent of participants who shared a joint account reported the highest satisfaction with their relationships, in addition to a deep “shared” connection. Plus, you can speak with a financial planner to help manage the long term goals for your joint account.
CON: No Privacy
That level of transparency comes with a loss of privacy and control. A joint account can make partners feel like they need approval from the other to spend money. You also place complete access to your money in their hands as well. You might not like what they spend the money on either. The same survey mentioned above found one-third of married participants aren’t completely “financially faithful” to their spouse. Communication, again, is a great tool to avoid this pitfall. Being clear with your partner on how you make purchases can minimize these arguments. Remember though, you still won’t be able to hide those birthday purchases!
PRO: Complete Access
Here’s the one no one wants to talk about. In the event of a death, a joint bank account will ensure the surviving partner has unfiltered access to the account. With all the other trauma surrounding such an event, not having to fight for access can be quite comforting.
CON: Complete Acc–…Wait, where’s all my money!?
In the event of a separation (knock on wood), having a joint account can become immediately problematic. Again, you are trusting another person with your money and the potential is there for the money to be drained in an instant.
Overall, as we’ve mentioned, Communication and Transparency are key! Be clear with your partner right from the start to ensure that your financial situation does not become a burden to your relationship. Here are a few questions you could ask to start the conversation:
– What are our financial statuses: Debt, savings, upcoming expenses, etc?
– What are our joint bills? Separate?
– Are there spending guidelines we would like to follow?
– What are our long term financial goals?
If you would like more advice as to how to navigate your joint finances, contact one of our financial advisors at firstname.lastname@example.org. Ask how the ‘Demand Newlywed’ portfolio can help you start growing your wealth together today.
This report is a publication of Demand Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.