When it comes to managing finances as a couple, many find themselves in a dilemma about whether or not they should open a joint bank account.
The old advice to merge your money with your spouse or partner may not be as applicable anymore. Why? People are getting married later in life, and as a result, are more likely to have developed financial lives and portfolios individually. In the US as of 2021, the average age for first marriage is 28.6 years for females and 30.6 years for males – up from 25 and 26.1 respectively in 1997. These adults are more likely to have amassed savings or investments, purchased property, or accumulated debt in the additional years before settling down. And, they may already have preferences and systems in place for managing their money and expenses.
Online banking makes it easy and quick to transfer money back and forth, compared to using cash or paper checks in decades past. So why do couples still merge finances in a joint account?
Joint accounts can help partners merge their finances and automate budgeting or financial planning for shared expenses like food, housing, or childcare. Alternatively, some people feel more comfortable and independent keeping finances separate, which can prevent conflicts about money (more on that later). Then there’s the question of how much should you merge, if you’re going to merge. Is all the money in one pool, or just a portion of your income and net worth?
We’ll dig in to scenarios to help you determine it makes sense to leverage joint bank accounts. At Milli, we’re here to help you reach your financial goals in a way that works for you – and we know that every couple and every financial situation is unique. There’s no right or wrong answer, and we’re here to help you explore all of your options!
Benefits of Using Joint Accounts
First, let’s cover the “pros” of joint accounts.
For many couples, using joint accounts is all about transparency and a communal attitude for money. With joint accounts, both parties have equal access and visibility into the account. It involves a level of trust with the other person that they won’t use the money for anything other than what the couple has already agreed upon. The shared nature may also add a bit of built-in accountability – if you know you have a stakeholder in your finances, you may resist the temptation to make those extraneous purchases.
Psychologists have studied this and uncovered some meaningful findings. A 2022 study of over 1,000 couples published in the Journal of Personality and Social Psychology found that when using joint accounts, there is a correlation with increased relationship satisfaction.
Plus, it’s hard to beat the convenience of using the same account to pay for shared bills. There’s no need to track how much each partner spent from their own accounts and try to settle up at the end of the month.
Benefits to not (Entirely) Merging Funds
Money is a deeply personal subject and plenty of couples prefer to manage their money and their relationship separately – for a variety of reasons. Let’s see why it might make sense to keep individual accounts.
Turns out couples don’t always agree about money
Spoiler alert: Managing money with your partner is a bit rockier than you might expect. Fidelity studied over 1,700 couples aged 25 years or older that are either married or in a long-term relationship. Here are a few notable findings:
- One in five couples said money is their greatest relationship challenge
- 54% make “day to day” financial decisions jointly, and only 57% make longer-term financial decisions jointly
- 44% of partners reported arguing about money at least occasionally
- When it comes to retirement, 51% disagree on how much savings is needed and 48% disagree on the age they plan to retire
Unsurprisingly, not all couples see eye to eye when it comes to their finances. Disclaimer: you don’t have to manage your bank account the same way to be a great pair.
If two people aren’t financially compatible, they may prefer to each have their own independent accounts. Separate accounts can provide space to meet each person’s individual financial priorities. This may prevent or mitigate arguments or stress about money – and from the research above, may be worth trying for couples who cite money as a top relationship challenge.
Couples can (and should) be transparent with individual accounts
Transparency isn’t limited to those who share the same account. Couples can keep money separate and still have open conversations about finances and financial planning. Couples can save up for big milestones such as house down payments or renovations, retirement, and more together, while still maintaining each person’s share of the money in their own name. Some argue that having separate accounts might even prompt more communication because there is no automatic visibility.
Merge Some, Separate the Rest
There’s a third option at play: keeping a portion of the money in a joint account, but the rest separate. Many couples find this is a great compromise. They get the convenience of having an easy way to pay shared bills, but the control and independence of having money in their own name.
Interested in merging some of your finances? Do the math on how much of your monthly or annual bills are shared, like housing, groceries, and childcare. Then, decide how much each of you will contribute to the joint account. Some might do a 50/50 split while others might make it proportional to each partner’s income. Next, you could set up transfers via linked accounts or direct deposit to automate adding money to the shared account. From there, the remainder of the money is yours to save and spend as you see fit. Pro tip: consider setting shared savings goals as well!
This sort of setup already is in place for any couple with retirement accounts. Retirement accounts like IRAs and 401(k)s only offer sole ownership options, so any couple with retirement savings by nature doesn’t have all of their money in one shared pool.
Using Milli to Reach a Specific Goal
Whether you merge all or some of your money with your partner, having a designated place to save for certain goals – shared or individual – can be helpful to keep you on track. If you merge some or all of your funds with your partner and are looking for another way to help you spend effectively or save more money, we’re here for you – Milli works well with other financial institutions.
You can link up to five banks accounts, or directly transfer money to Milli from your other bank account. Another way to fund your Milli account is to set up direct deposit with your employer for a portion of your paycheck.
With our Jars, you can set specific goals and save for them in a dedicated spot. Both you and your partner can work toward individual goals, bolstered by our competitive Average Percentage Yield and helpful savings automations. This can be a great way to address different financial goals and priorities individually. Whether you’re more likely to save for something practical or something fun, Milli’s Jars can help you save for whatever matters most to you!
As of right now, Milli doesn’t offer joint accounts. However, like all accounts, you can set a beneficiary so if in the event of your passing, the money will go directly to the person of your choosing.
Though using joint accounts may have once been the norm, today’s couples manage their money in a variety of ways. Ultimately, partners are a team no matter where their money is stored. So even for couples who don’t often see eye to eye when it comes to finances, there are many options to work together to meet goals and cover expenses!
If you’re currently pooling most or all of your money, you may want to use another financial tool to help you meet individual goals. If you’re managing money independently, then it’s up to you to determine which tools you use. Either way – set your goals and be transparent with your partner, and you’ll win together.
Along the way in your financial journey, Milli is here to help. Download the Milli app today and start saving!
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