Separate Bank Accounts

Is the key to relationship bliss

Separate Bank Accounts?

By Amy Morton

Anyone who’s ever been in a relationship knows that money can be a major source of tension, conflict and potential breakup. A 2014 survey by “Money” magazine found that 70% of married couples argue about money — more than sex, chores or anything else. What’s more, the respondents cited “frivolous purchases” as their top gripe about their spouses.

The Conflict
The irony, of course, is that what’s frivolous versus justified depends on each person’s deeply ingrained money values. You may be a saver, while your significant other is a spender. Or perhaps you prioritize travel for your elective expenditures, while your partner splurges on clothing or technology. These differences can lead to financial debates, guilt-tripping and resentment.

So, the question is: would your relationship be happier if you kept separate finances? With more couples marrying at an older age, more couples cohabiting before marriage and more couples choosing not to marry at all, today’s couples are increasingly experimenting with alternatives to the traditional practice of pooling their money. A 2018 Bank of America study found that 28% of Millennial couples keep completely separate accounts, compared to 11% and 13% for Gen X and Baby Boomers, respectively.

Even more couples, however, are employing some type of “yours, mine and ours” hybrid arrangement. A 2014 TD Bank “Love and Money” survey revealed that 42% of people living with a spouse or partner say they maintain individual accounts in addition to joint accounts, with “independence” being the number one reason for doing so.

Benefits of Separate Accounts
My longtime partner and I are among the “yours, mine and ours” set. We each contribute monthly to a joint checking account for shared household expenses — mortgage, utilities, groceries — as well as a joint savings account for home maintenance.

The rest of our income goes into our individual accounts. We feel this gives us the freedom to make personal purchases, without seeking approval, thus reducing the impulse to nag, judge or control each other’s spending practices.

Has it eliminated all financial disagreements? Not completely. But we’re still together after 12 years, don’t fight about money often, and we’re pretty sure we’d have more conflict if we had to check with each other before buying something. (A favorite example: I’d have objected to his $500 custom-made hat, which he calls “an investment.” In his defense, it’s beautifully crafted, and he still wears it and gets compliments 10 years later.)

Drawbacks to Consider
One obvious “con” is that we pay more monthly banking fees for multiple bank accounts. Some would also argue that our arrangement offers less transparency, meaning we could deceive each other (if we were that kind of people) about our income and savings. Finally, should one of us die unexpectedly, despite being each other’s beneficiaries, we may have to go through a legal process to claim the other’s accounts. This may be solved with a power of attorney or transfer-on-death provision, however.

Despite these potential downsides, we feel confident in our setup. While we have to monitor our joint account to avoid overspending, it helps us stick to a budget. And whenever an irregular expense comes up, we work out how it will be paid together. So instead of avoiding joint financial decision-making, we’ve simply focused it on the things that matter most, including our shared long-term goals.

70% of married couples argue about money