Tuesday, September 28, 2010

Whats Best Separate or Joint Accounts?

Make Yours a Happy MarriageImage by Ann Douglas via Flickr

I have had a lot of discussions about if you should have a separate or joint accounts after your married. Now, when your not married, I agree that you should keep separate bank accounts. Also separate investment accounts and separate credit card accounts. You shouldn't buy any assets together like cars. Also do not cosign a note on any purchase. This is all sensible because you never know if your going to stay together. 
What's different after you are married? From a relational point of view it is better to combine finances. If your young and newly wed what do you have to lose. On the first marriage you are all fresh and innocent about life and so is your spouse. There is no reason not to. What about if this is your second marriage and you have some assets to protect. Maybe you have children and you want to make sure your assets pass to them. I think it's right to keep you accounts separate. 
What's the plus side of combining? There will be less accounts to manage. Investments will be combined and make them easier to coordinate and plan. There is a relational aspect because you will have to talk to each other about your accounts. The act of planning and coordinating budgets, investments and paying bills together absolutely will bring you closer. Separate accounts makes this not necessary. 
But keeping separate accounts also has it's pluses. You have an autonomy that's important in today's culture. In the high percentage of divorce and break-ups, you have one less thing to fight about. In my personal life I have found that keeping separate accounts reduce the disagreements a lot. I spend and save differently than my wife. Many arguments have been avoided by separate accounts. In case of death, we both have life insurance and our accounts will transfer to the other. With this plan everything runs a lot smoother, for my circumstances, it works for us. Of course there is total transparency, this important in our relationship. 
In my first marriage we had combined accounts. At that time that was the way it was done. It worked out great for each of us. We were young and things were great. But now a days you want to play it safe. 
Many personal finance gurus say it's better to combine everything in marriage. I disagree because it's more important to do what works best for your particular situation. Don't just follow someones advice, do what's best for your situation. 

1 comment:

  1. I've always had joint accounts, and have been married only once. We recently converted all our accounts into a living trust.


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