Are Separate Accounts for Spouses a Fallacy?

by TTMK on May 28, 2012 · 9 comments

Joint accounts or separate accounts? This is a question that will face every couple that gets married.

For some, it’s an easy question to answer, and there is no doubt what the couple will do.  Many people believe in joint finances as the default option, where people operate as a true partnership with everything within marriage shared. Others have a strong sense of autonomy and want to go the route of separate finances.  Yet others fall in between, with a joint account for the couple yet separate accounts for spending money. Sometimes the issue of gender roles and money might even come into play with certain couples.

Clearly, there are different ways to handle the subject of sharing money in marriage.

However, I wonder if the notion of separate finances is really a fallacy.  In other words, are all accounts joint whether you intend them to be or not?

Let’s say a couple gets married, and opens up a joint bank account to pay the bills.  However, they have completely separate individual accounts in which they deposit their paychecks. They simply take a sum of money out of their individual accounts each month and transfer to the joint account to pay those bills.  This would be a hybrid approach to which I alluded above.

Then, let’s say that the couple unfortunately has major problems, and the relationship ends up going south.  Sadly, they become a statistic and end up going through a divorce.

In that case, let’s also suppose that the husband made more money than the wife (or vice-versa, I just had to pick one side as an example), and had much more money saved in his individual account than she did.  He made more and saved more, while she made less and enjoyed spending money.  He might think he could keep what’s in his account for himself, while she does the same with her account, and they will then split the joint account equally.

While I would recommend talking to a professional for the exact right answer – not me (disclaimer) – it seems to me that they husband would be wrong in this case.  My suspicion here is that if money was earned during the marriage, and kept in an individual account, those earnings might still have be split evenly with the other party.

If this is truly the case, does this make separate finances unsupportable in the event of problems? Not that anyone wishes for this, and hopefully most people don’t expect this. Regardless, it seems like money earned in marriage is shared, thus individual accounts might as well be treated as joint accounts.

My Questions for You

Following this logic, are separate accounts illogical?

If they are ultimately treated as joint, does it still make sense for people to individual, separate accounts during marriage?

 

{ 8 comments… read them below or add one }

Leigh May 28, 2012 at 4:56 pm

Does it not depend on whether or not the couple a) lives in a community property state and b) what their pre-nup says?

In a community property state, all money is definitely “ours”, not “yours” and mine” while you’re married. Keeping money from before you were married separate isn’t an entirely bad idea though.

I think that there are some situations in which maintaining individual accounts makes sense. For example, if you need to embark on a long-distance marriage for whatever reason, your day-to-day finances should not be combined, though I still think you should discuss decisions. I also think that having separate spending money can be a good idea, but I think that savings should be joint. Maybe each person should keep $10,000 in a separate savings account as “F you” money, but beyond that, to me, savings should be joint. Would you buy a car or a house without your spouse when you’re not married?

Granted, I am single and nowhere near getting married. But this is definitely something on my mind a lot as I grow my assets without being in a serious relationship.

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TTMK May 30, 2012 at 11:33 pm

Leigh – I think there can be real merit to keeping premarital assets separate. Money earned during marriage….I suppose it depends on the state as you mentioned, but it just might be truly joint regardless of intent.

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Deacon May 28, 2012 at 9:44 pm

Leigh makes a good point. What matters is two things:

1. Is it a community property state

2. If not, how are the accounts titled. It is possible for a married person to have an account which is sole and separate property.

But to your real point, it makes the most sense to combine your finances when you get married. If you don’t it can cause a lot of tension when you consider it “your” money and not “our” money. Why? Because you will want to do one thing with your money and your spouse will want to use it for something else.

Also, if you have separate accounts it is harder to focus on your financial goals and achieve them. It reminds me of a quote I once heard, “a house divided will not stand.”

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TTMK May 30, 2012 at 11:30 pm

Deacon – if accounts are premarital in nature, and not comingled, I suppose they might then be truly individual. I’m not totally sure. Nevertheless, I do agree with your last statement that a house divided will not stand!

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investlike1percent May 29, 2012 at 10:02 pm

my wife has a separate account which i never see. we both agreed this was good for my sanity because i would go crazy if i saw how much she spent and on what she spent money.

like your posts says though, no matter what we are jointly together.

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TTMK May 30, 2012 at 11:27 pm

LOL. Sometimes ignorance is bliss!

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Miss T @ Prairie Eco-Thrifter May 30, 2012 at 1:22 pm

I think it depends on how things are structured. My inlaws have separate accounts and just split different bills. They have done this for years. My hubby and I have some separate accounts but we put all of our accounting into the same system so we can see what money is spent on. We also have some accounts joined so that in the event we need to access each others money we can (i.e medical emergency). I think either works.

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TTMK May 30, 2012 at 11:27 pm

Miss T – really, whatever works for each individual couple is up to them. What’s interesting to me is how in reality, money in each other’s accounts would be shared as long as earned in marriage.

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