When Sarah and I were first married, we maintained the two separate checking accounts that we had when we were single. Mostly, we kept it this way out of convenience, as we both were in the routine of paying monthly bills.
To keep things straightforward, we divided up the shared monthly bills. We were each responsible for our own bills – the loan on the car we individually drove to work, our own student loans, and so on. The rest were divided between us based on our income level.
We stuck with this format through our years of overspending as well as through the first few years of our financial turnaround. In fact, we only merged our accounts in 2008, well after our financial situation had strongly rebounded.
During the period where we overspent, it was good that we had separate accounts. If our accounts were combined, I am confident we would have overdrafted regularly, something we managed to avoid with separate accounts. Our mistakes were related to not having shared goals and spending for today.
However, when we started to get our financial house in order, we combined our accounts.
The reason is simple. It became really clear to both of us that we are both affected by every financial move either one of us makes. If Sarah spends $20, then that’s $20 less available to me over the long run. I might not see the impact of that $20 spent immediately, but I will see it eventually in some fashion, either in terms of having less in our shared savings or having to cover a bill or an expense. The reverse is true – if I spend $20, then that’s $20 less that Sarah has.
In fact, this is the approach I would suggest for any couple trying to figure out their finances.
If you’re in a position where you both overspend and you’re both individually struggling to keep the bills paid, a shared account can be a real problem. It just gives you both a tool with which to blame the other for the financial problems without taking them upon your own shoulders.
If you can look at your account statement and see all of the withdrawals your partner made, it becomes very easy to just blame your partner for everything. It gives you a crutch with which you can avoid taking on personal responsibility for the situation.
Keeping your accounts separate means that you have to take responsibility for your own mistakes. You can’t blame anyone else for not having enough money in your account. You made the choices.
When you’ve reached the point where you can both admit that you have a problem and are working to correct it and you can begin to see those changes reflected in your checking account, merging accounts makes a great deal of sense.
When accounts are merged, the responsibility is shared. Your spending decisions affect your partner more directly than ever, so you have to be more responsible than ever before. If you’re in a position where you’re spending more than you should out of your own individual account, you’re not ready yet. You’re still not responsible for your own decisions, let alone those of your partner.
How will you know when that time comes? The best sign is when you’re taking care of your own business successfully. Is your balance growing each month, rather than persisting in a paycheck-to-paycheck state? If your partner’s money is tight, are you willing and able to help your partner out?
What about individual spending freedom? Our method of doing this is to simply have an informal “allowance” of free spending for both of us each month. Sarah buys things and I don’t really question it because I know she keeps a cap on the spending.
Sharing a checking account is a vital step in becoming more responsible for the financial well-being of your partner. If you’re not ready for that responsibility – and we weren’t when we were first married – then you shouldn’t have a merged account. It will end up causing many more financial panics and much more conflict with your partner and if you’re not ready to take charge of your money, all it will cause is fighting. Wait until you’re both ready to take responsibility not just for your own spending, but for your shared spending.