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Young couples bring many things into a new marriage.
His collection of “Snorks” DVDs. Her closet of secondhand eBay shoes. His annoying habit of leaving toenail clippings on the floor. Her snoring. And then there are the His and Her checking accounts, which lead to the first big money decision young newlyweds face: the bank-account dilemma.
Keep separate accounts or merge them? Money battles are a prime reason marriages break up. Making a smart bank-
account choice early on could help prevent a marriage-ending cash conflict later on.
It’s an important issue, because it’s a stand-in for two fundamental relationship questions: How much do I trust my partner? And, how much of Me should be sacrificed to become a We? Like everything about marriage, there are no set rules when it comes to couples’ bank accounts. It’s key to consider all your options and have a frank talk with your partner.
There are really three account choices, says Dayana Yochim, the author of The Motley Fool’s Guide to Couples & Cash. (The Motley Fool is an excellent personal finance Web site: www.Fool.com).
The choices
Couples can choose A) one joint account; B) separate accounts for personal spending and a third account for bills; or C) totally separate accounts. Option A is the simplest way to pay the bills on time, but spending independence is lost. When money is “ours” instead of “mine,” it generally means all purchases need approval of both partners - or lead to a fight.
With Option B, partners are free to spend leftover earnings after bills are paid. This method provides more autonomy, but it can also build resentment over bills if one partner makes more than the other. Some couples avoid this by splitting bills as a percentage of income, instead of in half. Major purchases also become more complex. Who pays for that new 52-inch plasma TV that he desperately wants? They’ll both end up watching it equally. Option C makes paying bills more of a challenge - who pays the rent this month? - but it provides total spending freedom. It also requires a lot of trust.
Savings technique
Those who go this way must be especially careful about agreeing on future financial goals such as retirement or buying a house. Fights are likely if one person is saving every spare penny of their paycheck for a down payment on a place while the other is wasting theirs.
Some financial relationship counselors, like Olivia Mellan, who runs the Web site www.Moneyharmony.com, argue that partners - particularly women - should keep some cash separate. Why? The high divorce rate, she says. “And having separate money is a symbol of autonomy that makes women feel better,” she says. The high divorce rate is real. Financially, it makes great sense to prepare for the possibility. But I worry that keeping a separate stash of cash in preparation for that eventuality might create trust issues that help lead to divorce.
Personally, I use Option A. It makes paying bills easier, and I like the calming effect it has on my buying habits. I find myself making fewer impulse buys, because my wife and I discuss almost every purchase over $20.
When I was single, I needed only persuade myself to buy another copy of Madden for PlayStation. Now I have to persuade two people. It’s a great savings technique.
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