Sharing Finances: The Pros and Cons of Joint Accounts - Milli Bank (2024)

When it comes to managing finances as a couple, many find themselves in a dilemma about whether or not they should open a joint bank account.

The old advice to merge your money with your spouse or partner may not be as applicable anymore. Why? People are getting married later in life, and as a result,are more likely to have developed financial lives and portfolios individually. In the US as of 2021, the average age for first marriage is 28.6 years for females and 30.6 years for males – up from 25 and 26.1 respectively in 1997. These adults are more likely to have amassed savings or investments, purchased property, or accumulated debt in the additional years before settling down. And, they may already have preferences and systems in place for managing their money and expenses.

Online banking makes it easy and quick to transfer money back and forth, compared to using cash or paper checks in decades past. So why do couples still merge finances in a joint account?

Joint accounts can help partners merge their finances and automate budgeting or financial planning for shared expenses like food, housing, or childcare. Alternatively, some people feel more comfortable and independent keeping finances separate, which can prevent conflicts about money (more on that later). Then there’s the question of how much should you merge, if you’re going to merge. Is all the money in one pool, or just a portion of your income and net worth?

We’ll dig in to scenarios to help you determine it makes sense to leverage joint bank accounts. At Milli, we’re here to help you reach your financial goals in a way that works for you – and we know that every couple and every financial situation is unique. There’s no right or wrong answer, and we’re here to help you explore all of your options!

First, let’s cover the “pros” of joint accounts.

For many couples, using joint accounts is all about transparency and a communal attitude for money. With joint accounts, both parties have equal access and visibility into the account. It involves a level of trust with the other person that they won’t use the money for anything other than what the couple has already agreed upon. The shared nature may also add a bit of built-in accountability – if you know you have a stakeholder in your finances, you may resist the temptation to make those extraneous purchases.

Psychologists have studied this and uncovered some meaningful findings. A 2022 study of over 1,000 couples published in the Journal of Personality and Social Psychology found that when using joint accounts, there is a correlation with increased relationship satisfaction.

Plus, it’s hard to beat the convenience of using the same account to pay for shared bills. There’s no need to track how much each partner spent from their own accounts and try to settle up at the end of the month.

Unsurprisingly, not all couples see eye to eye when it comes to their finances. Disclaimer: you don’t have to manage your bank account the same way to be a great pair.

If two people aren’t financially compatible, they may prefer to each have their own independent accounts. Separate accounts can provide space to meet each person’s individual financial priorities. This may prevent or mitigate arguments or stress about money – and from the research above, may be worth trying for couples who cite money as a top relationship challenge.

There’s a third option at play: keeping a portion of the money in a joint account, but the rest separate. Many couples find this is a great compromise. They get the convenience of having an easy way to pay shared bills, but the control and independence of having money in their own name.

Interested in merging some of your finances? Do the math on how much of your monthly or annual bills are shared, like housing, groceries, and childcare. Then, decide how much each of you will contribute to the joint account. Some might do a 50/50 split while others might make it proportional to each partner’s income. Next, you could set up transfers via linked accounts or direct deposit to automate adding money to the shared account. From there, the remainder of the money is yoursto save and spend as you see fit.Pro tip: consider setting shared savings goals as well!

This sort of setup already is in place for any couple with retirement accounts. Retirement accounts like IRAs and 401(k)s only offer sole ownership options, so any couple with retirement savings by nature doesn’t have all of their money in one shared pool.