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Editor’s Note: This story was originally Penny Horder.
If you are married or live with your significant other, you have a lot to share. your home. weekend plans. Maybe she has one child or she has two.
But just because you live together doesn’t mean you have to share the same bank account. Having separate bank accounts in a marriage or serious relationship may be the perfect solution to harmonious money management.
Just because you have separate bank accounts doesn’t mean you’re not connected as a couple. In fact, there are many valid reasons why couples choose not to merge their finances.
6 reasons why couples want separate bank accounts
- You want to stop sneaking about your purchases.
- You have different income levels.
- There are different spending habits and money management styles.
- You are used to financial independence.
- You burned your ex-partner.
- I want to protect my children’s property.
1. I want to stop being sneaky about my purchases
If you share a bank account with someone you care about, they’ll see it every time you swipe your credit card, shop online, or withdraw from an ATM.
Whether you’re trying to surprise your honey with an anniversary gift or don’t want to know exactly how much you spent on your new pair of shoes, sometimes you want a little bit of financial privacy.
According to The Penny Hoarder’s 2021 survey on people’s budgeting and spending habits, nearly 1 in 4 respondents said: keep purchase confidential from their significant other for fear of how they will react.
Keeping important financial secrets with your spouse, such as racking up a large amount of debt on a secret credit card, can be detrimental to your relationship. However, if you want a little more autonomy to spend your money (responsibly), having a separate bank account can help.
2. Different income levels
If you earn much more than your partner, it might be frustrating to see you spending your hard earned cash on purchases you disagree with.
With a low income, you may feel like your partner is micromanaging your spending.
You can avoid resentment and frustration by figuring out fair ways to divide household income and expenses. And allow each person to have the financial independence to manage their own money properly.
3. Different ways of spending and managing money
Another reason to choose a different bank account is if you and your other half have different spending habits and money management styles.
While your husband prefers to buy the latest technology, you may enjoy spending money on experiences. maybe your girlfriend cash envelope system Even if you hate carrying cash around and can’t function without verifying your identity, you can still stay within your budget. Budget management app every day.
Rather than trying to convince your partner to see things your way or constantly arguing about the balance of a joint account, you might be better off keeping your own personal account.
4. Accustomed to financial independence
Because couples wait until later in life to get married, it can be difficult to adjust to combined finances after managing bank accounts alone.
“If you’re gathering in your 30s or 40s and beyond, you’re used to doing things your way and you’re comfortable with that,” says Isabel Barrow, director of financial planning. Edelman Financial Engines.
It may be desirable to maintain separate bank accounts.
There’s also the concern that once you hand over the reins to your spouse to pay bills and handle investments, you’ll lose your money management skills.
It’s better to keep two people connected so they can manage their own money independently, rather than letting one partner handle everything.
5. You got burned by your ex-partner
Past experiences can have an emotional impact on how we think about money.
Barrow said he would often see couples in second marriages choosing not to open joint accounts or consolidate other assets.
“I think a lot of the time it’s to give them a sense of security that they can spend their money freely so they can save as they please,” she said. “They may have had disagreements about money in their previous marriages, or it may have led to divorce. Afterwards, they were left financially vulnerable and didn’t want to go down the same path again.” is.”
If your previous partner was financially controlling or irresponsible with money, keeping your own savings account may give you peace of mind — if your new spouse or significant other exhibits the same behavior. Even without.
6. I want to protect my children’s assets
Couples who get together later in life and have children from previous relationships may choose to maintain separate accounts and assets in order to pass wealth on to their children.
If you want to protect your inheritance or gifts, placing those financial assets in a trust can help, Mr. Barrow said. Assets held in trusts are more likely to be protected from being divided between spouses in the event of a divorce.
4 tips for managing your money separately
Keeping finances separate in a relationship requires a little extra work.
1. Plan joint costs
If you decide to keep your funds separate, you’ll need to make a plan for how you’ll handle shared household expenses. “Every couple needs to have a system that works for them,” says Barrow. “Once you find it, keep doing it.”
Each partner may decide to cover a specific set of invoices. For example, your spouse may be responsible for paying rent and student loans, while you pay for childcare and groceries.
Another option is to split all bills. remittance app Like Venmo and Cash App, you can easily reimburse each other for shared costs. But Barrow has found that frequently splitting checks can become tedious and lead to arguments and resentments.
Her recommendation is for couples to open joint bank accounts to share expenses while maintaining separate accounts for each. Must be based on percentage of household income.
For example, if you are making $60,000 and your partner is making $40,000, you should be responsible for 60% of the shared costs and your partner should be responsible for 40%.
2. Give important accounts both names
Even if you pay your bills separately, it’s important that both people in the relationship have their names on the mortgage or rental agreement, especially if you’re unmarried.
“If…you are not married and [the home] If it’s one person’s name, the unmarried partner could be kicked out of the house if the person whose name is on the mortgage dies.
The same rules apply to utility accounts. I don’t want to break up with my boyfriend, and I don’t want the electricity and water to be turned off. Because my boyfriend was the only one on my account.
However, if you have Netflix in your name and your significant other has a Spotify account named, it’s less important to make sure those subscriptions are in both people’s names.
3. Separate accounts don’t necessarily protect you if you split
Just because you set aside money in your name only, your spouse can have rights to those assets in a divorce.
For married couples in the joint property states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, all assets and liabilities shall be considered marital property, It is usually split evenly in a divorce regardless of whose name it is. on your account.
Most states are equitable distribution states. That means assets acquired during a marriage are “divided fairly, but they may not be evenly distributed,” Barrow said.
Having a prenuptial agreement before marriage means that you and your spouse can mutually agree on how the assets should be divided instead of following state law.
4. Take time to plan your future together
If you and your spouse manage your finances separately, your overall financial situation may not be as clear-cut as a couple with a joint bank account.
That’s why it’s important to have open conversations about money and be on the same page about financial goals. must be
Make financial transparency part of your daily life by implementing monthly money date or financial meeting.
“Even if you keep your money separate, you still need to plan together,” Barrow said.