Should my partner and I have a joint account?
There is no one right way to manage finances as a couple. So many factors need to be considered when deciding how to manage money with your partner. Do you have similar or vastly different incomes? Do you have similar spending habits? What are your shared or individual goals? What other financial commitments do you have? Are you married?
While it may not be easy to talk about money with your partner, if you are living together and have some shared expenses, you should at the very least, have a conversation about how to manage those shared expenses in a way that feels good for everyone. Avoiding that conversation typically leads to assumptions, miscommunications, and eventually resentment.
Even before entering into a relationship, most of us have some concept of how we think money should be handled within a couple. Often this idea comes from what your parents modeled for you, along with influences from your broader culture or even from media. Because talking about money is considered taboo, we often don’t realize just how different other people’s perspectives on money can be. We assume our perspective is the standard or the “normal” way to think about money.
Having an open conversation with your partner about how you envision money being managed will help identify places where you may see things differently. With a better understanding of your individual perspectives, it's easier to create a system for managing money that suits everyone's needs.
Our lives are so nuanced, so it can be challenging to find an approach that feels fair or equitable to both parties. Is splitting rent 50/50 fair? What if one earns more? What if one partner needs a 2-bedroom so they can have their home office? What if you earn similar incomes, but one has $50k in student loans while the other has none? What if it’s $50k in credit card debt instead of student loan debt? There are a lot of very real factors to consider.
Again, there is no one right way to approach money as a couple, however, the 3 most common approaches to handling finances as a couple are Totally Separate, All-In, and Hybrid.
With the Totally Separate method, couples maintain their own individual accounts. They each pay for their individual expenses. For any joint expenses they both contribute their individual portion (often this looks like one person Venmo’ing the other for rent or bills), or they divide the shared expenses, so for example, one person pays for rent, while the other pays for utilities or joint expenses like groceries.
With the All-In method, couples completely join their finances. Both of their paychecks go into one joint account, and all of their expenses (both joint and personal) are paid from this joint money. Retirement accounts are always held by just one person, so those accounts remain separate, but typically all other accounts would be joint. Each person may have their own, individual credit cards, but those cards are paid off from their joint checking account.
A Hybrid approach, as the name suggests, is somewhere in between the Totally Separate and All-In approaches. It usually involves at least one joint account for shared or household expenses. For couples closer to the separate side of the spectrum, the shared account might cover a few shared bills like rent and utilities. In this scenario, they would send a small portion of their paycheck to this account, and they’d use their own individual money for all other spending and saving towards future goals. On the other end of the Hybrid spectrum, couples may have a joint account that covers almost all of their spending (rent, utilities, groceries, travel, restaurants, gas, etc.), but still maintain their own personal accounts for individual spending or “fun money”.
There are a lot of ways that the Hybrid approach can look. But essentially some money gets pooled for joint expenses, and some money is kept separate for individual use.
Is managing your money Totally Separate right for you?
The Totally Separate approach is often where most couples start out when they first move in together. In a new relationship, when the likelihood of a breakup is higher, keeping your accounts separate is less risky and doesn’t require as much transparency. But at some point, many couples find that the effort required to keep things “fair” (keeping tabs on who paid for what), is very transactional and may feel more like a roommate situation than a romantic relationship. When your money is completely separate, it can be harder to effectively work towards shared goals.
Often couples may start out managing money Totally Separately and over time shift to either a Hybrid or All-In approach. However, in some cases, keeping things Totally Separate long term may make sense. If you or your partner have a more complicated financial situation, like alimony or child support obligations from a past relationship, keeping finances separate might reduce complications or conflicts. Similarly, if one partner has a history of substance abuse or gambling addiction, or if one partner has experienced financial trauma in a past relationship, keeping things separate may offer a level of protection or a sense of security.
Pros of Totally Separate
Retaining autonomy - When your account is solely yours, you can do what you want with it.
Less setup required - You don’t need to open any new accounts.
Privacy - Not only do you have control over your money, but you can also decide what details (purchases, account or debt balances, etc.) you share with your partner.
Retain full ownership of our money - In the case of a breakup, it’s much simpler to divide assets if they were never co-mingled in the first place.
Keeps financial complexity separate - when one (or both partners) have a more complicated financial situation (i.e. paying child support, alimony, supporting an elderly parent, etc.), co-mingling accounts can add more complications.
Protection against financial abuse - Most instances of domestic abuse also involve financial abuse. A common reason why domestic abuse victims don’t leave is that they don’t have access to their own money. Maintaining separate accounts is a great way to reduce your risk of financial dependency, and in turn, financial abuse. If either partner has experienced financial abuse, or witnessed a parent experiencing abuse, maintaining separate accounts may help them feel less vulnerable in their current relationship.
Cons of Totally Separate
Lack of shared goals or shared vision - Managing money separately can foster a more individualist approach, so it can take more effort to create and work towards long-term goals.
Potential inequity - If individuals have discrepancies in their income or their financial obligations, it can lead to a gap in discretionary spending. If one partner earns less or has a lot of debt to pay off, they may grow resentful of the partner who is enoying a lifestyle that feels out of reach to them. When accounts are separate, it requires more conscious effort to maintain a level of equity.
Roommate status - constantly Venmo-ing or keeping a tally of who paid for what isn’t inherently bad, but many couples grow tired of the transactional nature. It can feel more like a roommate relationship than a romantic relationship.
Risks of keeping money Totally Separate
Lack of transparency/awareness - If you are not privy to your partner’s financial life, there is a greater potential for surprises. You may be oblivious to your partner’s growing debt, lack of savings, or failure to adequately invest in retirement accounts. In some states, if your spouse dies with outstanding debt (even if it is in their name only), you may still be responsible for it.
Lack of access in an emergency - If your partner dies, or is incapacitated, you may not be able to access their money. Even if you stand to inherit all of their assets, it may be a while (several months or more) before you can access the funds, depending on how the accounts or their will/trust is set up. If there are shared bills that need to be paid (ie a mortgage) you may have to come up with that money yourself.
Is the All-In approach right for you?
With the All-In approach, all of your money goes into the same pot. It is a What’s-Mine-is-Yours way of managing money. With this communal style, your money is fully available to the family unit.
Going back a generation or two, this is how most families approached money. When they got married, they opened a joint account and all money flowed in and out of this new joint account.
In a time when most women stopped working when they had children, having access to a family account was critical. Now, as there are more dual-income families, this All-In approach isn’t necessarily the default for married couples.
There is a simplicity to this method that is quite attractive. All money flows into and out of a joint account. Everyone has equal access to all the funds. Even when one partner earns significantly more, or if one partner is taking a career break (to raise kids, for example) their resources are pooled so they still have access to equal spending power.
By being able to see everything that you and your partner have together, it’s easier to act as a unit and work together towards shared goals.
Pros of All-In
Same team - The transparency makes it much easier to create and work towards shared goals and a shared long-term vision.
More transparency - It’s harder to hide shady behavior when you can see where the other person is spending money.
Emergency access - In the case of an emergency (death or incapacitation of a partner) the other partner still has full access to the family’s money.
Easy to factor in children - With children, there is an endless list of shared expenses. Viewing the cost of diapers and daycare as “family costs” is often easier than trying to decide how much each person owes towards those expenses.
Easier to navigate income gaps or career breaks - If one partner is a lawyer and the other is a teacher, pooling resources allows them to enjoy the same level of financial stability and comfort. Or if one partner is taking a career break to raise children or to recover from a medical concern, pooling resources allows the non-earner to still have access to spending money.
Cons of All-In
Lack of privacy - Sometimes a little mystery isn’t a bad thing. It’s much harder to surprise your partner with a birthday gift if they can see your transactions. Or, if your partner is a little critical of how you spend your discretionary money, you might prefer a little more privacy so you don’t have to hear comments on the “frivolous” things you spend on.
Supporting lower earning partner - If you are the higher earner, you might see pooling resources as a burden. If you are frustrated with your partner’s lack of ambition to get a job or a higher-paying job, you may be resentful that they have full access to your income.
Risks of All-In
False sense of transparency - While it takes more effort, it’s still feasible for a partner to hide money or income. Having an All-In approach may lead people into being naively trusting that they are seeing their partner’s full financial picture.
Joint ownership - Your partner could potentially withdraw all of the money in your joint accounts. Even if you were the only one funding the account, if their name is on the account they have full access to the funds. This can be of particular concern if one partner is secretly planning to leave the relationship, or if one partner has issues with drug or gambling addiction, resulting in destructive and impulsive uses of joint resources.
Is a Hybrid approach right for you?
Money is a taboo topic, and even among married couples, it’s not uncommon to feel uncomfortable being 100% transparent with how you spend or manage your money. A Hybrid approach allows you to blend some of your finances while retaining some level of privacy and autonomy. It simplifies paying joint bills, but minimizes the risk exposure in the case of a breakup (your partner/ex-partner only has access to the limited funds you’ve contributed to the joint account).
With a Hybrid approach, couples may use a joint account to cover just a few basic shared housing expenses (i.e. rent and utilities), or they may pool most of their income in a joint account to cover the majority of their living expenses (rent, utilities, food, transportation, kids, pets, travel, etc), leaving just a little bit for each of their personal expenses, or “fun money”.
Each couple needs to define what they consider personal vs. joint/family spending. Some may decide that all food falls under the Joint category, while others may decide that groceries and dining out together are joint, but that dining out with friends (without your partner) it’s considered personal spending. Some will view clothes and personal care items as general upkeep costs that would fall under Joint, while others may see those as personal expenses. There isn’t a right or wrong way to approach those types of spending categories, but you need to discuss how you want to approach them. Getting clear on those potential gray areas helps to avoid conflict.
Structurally, there are two ways to set up a Hybrid system. You can have both of your paychecks directly deposited into your joint account, and then transfer your allocated Personal Spending money from the joint account to your individual accounts, like a monthly allowance. Alternatively, your paychecks can go to your individual accounts, and then transfer the agreed-upon amount into the joint account.
Pros of Hybrid
Flexibility - You can create a custom system to best fit your relationship
Same team - The transparency makes it much easier to create and work towards shared goals and a shared long-term vision
Maintain some privacy - You are able to spend your personal money free of judgment from your partner, but with the added peace of mind that if your partner is spending in ways you think are frivolous, there is a limit to the potential damage their spending behaviors, so it won’t completely sabotage your progress towards your financial goals.
Retain full ownership of at least some money - in case of a breakup, or in the case of an emergency, you still have full access to at least some funds.
Cons of Hybrid
More accounts to keep track of - For some, having several accounts to keep track of feels complicated or disorganized.
Requires ongoing conversation - As your expenses evolve or your income shifts, the system may require adjustments. A Dual Income, No Kids couple will likely have a different system than a couple with multiple kids, and one parent out on parental leave. So you need to recognize when your system needs adjusting.
Fine line of equity vs. equality - How much should each person contribute to the joint account? Is it 50/50 or an equal percentage of income? Does one partner get more benefit from the Joint expenses? Does one partner need/want a bigger discretionary spending budget? There is no one right answer, so each couple will need to discuss what feels most comfortable and fair for everyone.
Risks of Hybrid
Potential to hide money - While there is more transparency than having completely separate finances, there is still the potential for one partner to hide money in other accounts or to accumulate debt that they don’t disclose.
Joint Ownership - Your partner could potentially withdraw all of the money in your joint accounts. Even if you were the only one funding the account, if their name is on the account they have full access to the funds.
There are lots of variations in between, so you can adapt one of the above approaches to come up with a customized plan that gives you the benefits you want and reduces the negatives.
When deciding how to approach money with your partner, it’s important to have an open and ongoing dialogue. Talking about how your own parents managed money can be a good way to start the conversation. We often see our parent’s approach as the default style, so it’s helpful to understand what your partner’s initial frame of reference is. You can also talk about what you saw to be effective or ineffective with your parents’ approach to money. That may shed some light on what style would be a good fit for you.
It’s also common for money management styles to evolve along with the relationship. So don’t feel like you need to decide on a structure that will be in place for decades.
