Is a joint bank account the right decision for a married couple?

When we got married we created a joint bank account. Our accounts have expanded since then to include checking, savings, medium-term goals and an emergency fund. As far as I know, we each have just those joint accounts, aside from our own Roth IRA and 403(b). There are no secrets, financial or otherwise, between us.

The week of our wedding, a few close friends advised me to keep a separate stealth account, “just in case.” I haven’t heeded their advice in creating a runaway fund. Am I making a mistake? Was it the right decision to put all our money into one account over eight years ago? We were young and financially naïve.

The success to sharing finances, and marriage as a whole, is open communication. But don’t wait until your wedding day to start discussing finances. The sooner the better! Discussing money early and often makes it less awkward when a major financial decision arises.

Joint bank accounts and credit cards, at least for us, are a means to keep the financial discussion open. In order to fully benefit from the openness each party has to review the records. Mr. PW and I have always shared our bank accounts, but haven’t always reviewed nor discussed them regularly.

We had a sort of implicit trust between ourselves when it came to finances. Mr. PW regularly reviewed our bank accounts and credit card, and I paid the routine bills when we were in residency, but neither of us turned it into a major conversation. Without jointly reviewing cash flow, a major benefit of sharing finances is lost. One’s poor financial decisions could hurt both involved if statements aren’t tracked and spending behavior analyzed, though the purpose of joint accounts isn’t just to bust your partner on a bad decision.

We’ll take a deeper dive into the benefits of jointly reviewing cash flow and expenses in a future post. Attentiveness to cash flow is critical for financial health for individuals, couples with separate accounts and couples with joint accounts. Reviewing statements routinely and openly with each other is a good way to teach your kids the importance of cash flow and modeling good financial health.

Sadly, Mr. PW and I didn’t start reviewing our credit card statements in depth until early 2017, when I became concerned about what my latté addiction was costing us. For those of you who know a good espresso drink, you understand everything that goes into making that perfect cup from the quality of the beans to the water temperature to the pressure. We looked into getting our own espresso machine, but one that could make a quality shot of espresso with reasonable counter space wasn’t in our budget, nor would it ever be. When we reviewed our cash flow, I was shocked to see I was spending about $150/month on espresso drinks. I gradually tapered down and am now spending $0-$25/month. I get my daily caffeine fix from the Keurig at work, and it does the job just fine.

Even though we share bank accounts and credit cards, we haven’t regularly discussed the purchases. Over the years, Mr. PW has become the partner who has taken more of an interest in our finances (after I generally handled our joint finances while we were in residency together). We look over our credit card statements individually, but it’s never been coordinated. Questions come up, and occasionally suspicious/fraudulent purchases are identified. In working towards one of our missions of this blog, to improve our financial health, we’ve agreed to start monthly family financial meetings.

Having joint accounts makes it challenging for me to surprise Mr. PW with a new grill for Father’s Day. We can get the right grill as a family. The joint account helps keep me accountable from needlessly overspending. Rather, I see the limited budget as a creative challenge for the kids and me.

Overall, having a full-disclosure financial relationship has helped me be more responsible with my money. My spending is in the open, no cheating. Even when we haven’t regularly reviewed our cashflow, knowing that Mr. PW could see the details has sometimes kept me from emotional spending. If my income was kept in an account just for me then I could buy a new mountain bike without first discussing it. But if it’s something that Mr. PW wouldn’t approve of, then the bike would likely lay in my office hiding under a blanket of shame.

Undoubtedly I have benefited financially from our financial union. Without Mr. PW’s prodding, I wouldn’t contribute to my (backdoor) Roth IRA on my own and would have limited retirement savings. I would probably have purchased a home with zero down using a physician loan, thus being in deeper debt (we still rent). I’d be paying the minimum required on my student loans and not have refinanced, so they would be compounding interest at 6.5%-8.5%. We really do take care of each other.

Joint accounts isn’t for everyone. But even if you have seperate accounts, you should have monthly family financial meetings and share statements.

 

Do you and your partner have joint or separate accounts? What’s the benefit or drawback of your situation? Share your stories below.

 

One Comment on “Is a joint bank account the right decision for a married couple?”

  1. It’s also a good idea to limit the amount of credit cards you use. If you do joint bank accounts, it makes sense to share the family cards. Those are easily maxed out and too easy to go the the next one for more purchases. Before you know it, you can be in the hole for well over $20K and barely able to pay off the interest, let alone knock down the principal. It’s worth a good review each month to see how much interest per year you end up with. It’s wise to get ahead of that curve and limit your cards to one or two (one for business and one for personal). Make a goal to pay them off each month to avoid the slippery slope of debt.

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