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My wife and I are recently married, both of us are working hard. At the moment we currently have the same system as prior to our marriage. Which simply put is that both of have our own bank accounts and we split the costs between us.

We will soon be taking out a mortgage for a house. Any recommendations how to arrange our bank accounts in an intelligent system so that we can put our money together?

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    From the comment, I thought this was going to be a divorce question. =X – corsiKa Dec 3 '14 at 20:03
  • @corsiKa Feel free to update the title then just like I did – pal4life Dec 3 '14 at 20:20
64

There are essentially three ways to do this:

  1. Each of you have your own bank account. Shared costs are split between you equally (or whatever proportion you want). Any money left over is yours to do what you want with. This emphasises your financial independence from each other, and becomes much less tenable if you are not both working.
  2. One bank account. The traditional approach. All money is paid into it, and everything comes out of it. Both of you get to scrutinize what the other person is spending. There may need to be some negotiations around surprise gifts etc.
  3. "His", "Hers" and "Ours" bank account. Most expenses come out of "Ours", but an agreed-on amount goes into "His" and "Hers" which the owner can do what they like with. Or you can agree that a fixed amount comes out of "His" and "Hers" for joint purchases, which makes it more similar to option 1.
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    This question seems familiar. I use your method #3. We were paid into his/hers, and transferred all but $1000 to Joint. I didn't want to worry about sharing a joint checking account that we both might mess us. 20 years, never an issue. – JoeTaxpayer Dec 2 '14 at 0:04
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    I can highly recommend option 3. In my opinion, it's the best of both worlds. Everybody keeps a little independance for stuff they want to buy themselves, while you still have to discuss, talk and make the "grand" finances out of the joint account work. I cannot see any downside to this. – Florian Peschka Dec 2 '14 at 8:12
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    Chiming in to say option 3 is what we use. If you both pay in 50:50 then you ensure all bills are paid 50:50 with no additional hassle (works for all ratios). It then leaves all remaining earnings as personal spending monies. – Fractional Dec 2 '14 at 10:53
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    As a note to option 3, I find that a variant is good for single people too! Have a main "budgetted household expenses" account (comparable to the Ours account), and your own personal account that gives you a set amount per time period to use for the "because I wanna" stuff (like eating out instead of packing a lunch, etc). At the end of the time period any money left over in your personal account can be rolled into a personal savings account, which you can use for "bigger stuff that I just wanna", etc. Since trying it I worry so much less and find it easier to control expenses. – BrianH Dec 3 '14 at 2:12
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    @O.R.Mapper If you each have full access rights to both accounts, aren't those really joint accounts? – Ben Miller Dec 3 '14 at 11:39
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There are different approaches, but here is what we do and what I recommend. Now that you are officially a married couple, open a joint bank account, and eliminate your individual accounts. There are several reasons for this.

Having a joint account promotes unity and teamwork. When you only have a joint account, you do not have "your income" and "her income," or "your expenses" and "her expenses." You work together in everything. You discuss your goals and set your household budget together. If one of you makes more money than the other, that person is no longer "worth more," because your incomes are pooled together. If one person with a higher income has more in their account than the other person does, it can lead to envy, which you do not want in your marriage.

Having a joint account is more efficient and makes more sense. With separate accounts, who pays the rent/mortgage? Who pays the utilities, or buys the food? If you have separate accounts, it takes a lot of work to worry about what is "fair" when deciding how to divide up the expenses. With a single household budget and a joint account, you decide together what the household expenses are, and they get paid from one account. If one of you has debt, you both have debt. You work together to get it paid off and strengthen your financial situation in the process.

Having a joint account forces you to discuss your finances together. Working toward common financial goals together is crucial in a strong marriage, but if you maintain your separate accounts, you might be tempted to put off these discussions until you are forced to by life circumstances. It is better to work together from the start, and joining your finances facilitates that.

You are intending your marriage to last. Live your financial life like you believe that you are a team for life. If you live in a community property state, separate accounts are a fiction anyway; everything is treated as if it was pooled together in the event of a divorce.

I understand that if you are used to having your own money, it can be difficult to give up that sole control over your income, but in my opinion, it is worth it. You will certainly hear of examples from couples who maintain separate accounts and make it work. In my humble opinion, combining your finances completely is easier to do right.

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    "...who pays the rent/mortgage? Who pays the utilities, or buys the food?" Either one still has to take care of the "mechanics" of the transaction (whether online bill payment, mailing a check, going to the grocery store, or whatever is relevant). Perhaps ideally, both would: you'd sit down, go out, or whatever, together and do it; that way both have full knowledge of the finances. Having private accounts in addition doesn't mean the couple won't be working as a team. I think of a joint account as "household's money" and each private account as "pocket money". – a CVn Dec 2 '14 at 14:42
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    Single most important item in here is: "You intend for your marriage to last". If that's really what anyone intends then this is the way to go. +1 – Ryan Dec 2 '14 at 16:53
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    I joined this stackexchange site just to upvote your answer. – juanpaco Dec 2 '14 at 21:46
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    IMO it's a terrible idea to ONLY have joint accounts. What happens when one of you dies and the account is frozen temporarily while it goes through probate? What happens if you do split up, and one of you clears out the account from under the feet of the other one? – Vicky Dec 3 '14 at 11:17
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    @Vicky Joint accounts are not frozen when one party dies. So this is actually an argument for eliminating the individual accounts. Do you want half your money frozen if your spouse dies? – Ben Miller Dec 3 '14 at 11:32
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My wife and I set up a shared bank account. We knew the monthly costs of the mortgage and estimated the cost of utilities. Each month, we transferred enough to cover these, plus about 20% so we could make an extra mortgage payment each year and build up an emergency fund, and did so using automatic transactions.

Other shared expenses such as groceries, we handled on an ad-hoc basis, settling up every month or three. We initially just split everything 50-50 because we both earned roughly the same income. When that changed, we ended up going with a 60-40 split.

We maintained our separate bank accounts, though this may have changed in the future.

A system like this may work for you, or may at least provide a starting point for a discussion. And I do strongly advise having a frank and open discussion on these points. Dealing with money can be tricky in the bounds of a marriage.

6

I agree with Option 3 from the accepted answer (His/Hers/Joint), but with one caveat (that my wife and I are finding out).

Once you have children, if your income is in the mid-range where you are not paycheck to paycheck, but are not floating in excess money either (ie, you can have a vacation, but you have to plan for it and save up for a few months to do so), the child-relative expenses begin to be a huge factor in your overall budget, such that (particularly if one partner does more of the child-related buying) it can be hard to really keep up the 3 account separation, because those child-related expenses may end up being all of one earner's paycheck.

We originally did the 3 way split, where we took rent, car, and utilities from joint (ie, each transferred a reasonable portion to the joint account to cover), and just bought groceries each occasionally such that it was generally a reasonable split (as we both shopped for groceries and both earned close enough to each other that it worked out). But once we had kids, it ended up being very different, and we eventually had to more properly budget all of our funds as if they were basically joint funds. While we still do have separate accounts (and, largely, separate credit cards/etc., except for one joint card), it's almost pro forma now due to the kids.

6

Option three is our preferred method, and we never argue about money. First we did a budget to work out ALL monthly joint out-goings (mortgage, bills, grocery etc). Then we each agreed who would pay what into the joint or household account - at the moment, I earn more than my wife, so I pay more, but we sit down every three or four months, to see if it needs adjusting. This way, we each keep our own individual accounts private, but pay what is necessary into the household account. We also set up a joint savings account; often at the end of the month, we'll have a little extra left in the household acount, and we siphon that off into joint savings to cover future unexpected costs - looks like our tumble dryer is on its last spin cycle at the moment, for example, and the joint savings account will be able to cover the cost of replacement. it all takes a bit of administration - but, as I say, we've never had a cross word about money, so the system seems to work.

5

My wife and I chose to share all bank accounts and credit cards. We did so because we realized that, over the course of a marriage, the pendulum of who is the primary breadwinner may shift repeatedly. Having one account gets us in the habit of thinking about our needs and wants together and eases any transitions that may come as one or the other of us quits a job/returns to school/reduces hours.

I should also say that this system would likely not work well if either partner has semi-compulsive spending/consumption habits. I'd recommend separate bank accounts with a joint account for your mortgage in that situation.

  • keep in mind, two people working out of one checkbook can be tough. The first time you both write checks that day and realize you risk overdraft, you'd consider at least one separate account. DJ's #3 is the best, IMHO. – JoeTaxpayer Dec 2 '14 at 17:38
  • @JoeTaxpayer Two people working out of two checkbooks (tied to the same account) would be tough, but two people working out of one checkbook is no problem, in my experience. – Ben Miller Dec 3 '14 at 11:44
  • @BenMiller - a matter of one's own experience. As an engineer, I consider it an extra point of failure. Or at least an extra effort in communication. – JoeTaxpayer Dec 3 '14 at 12:15
  • @JoeTaxpayer As a fellow engineer, I would consider it an efficiency. :) – Ben Miller Dec 3 '14 at 12:57
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    We have a different solution: don't write checks (well, just rent) – Nate Vaughan Feb 29 '16 at 0:11
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All of these answers are great but I wanted to add one piece of advice from someone who has been married 8 years and been in various financial "situations." Have one of you (whoever the two of you feel is more organized and more financially responsible) be solely in charge of paying the monthly bills, but keep a spreadsheet or some other tracking mechanism so that the other can monitor this as well. That way if you guys ever decide to switch roles there won't be much of a learning curve.

Also, don't do three bank accounts. One or two is enough, more than that starts becoming more difficult to keep track of and if you have any sort of monthly fees on the accounts it also wastes money. My wife and I each have our own account and we get money for each other if necessary. She handles paying the bills but keeps a monthly spreadsheet that has all pertinent info. We have a number and color coding system to determine which paycheck (1st or 2nd of the month) the bill is paid in and whether it has been paid, not paid, or past due (green, yellow, red). Hopefully you don't ever have to see the red color :P

3
  1. Primary acct. Receive and distribute money to all other accts. For security do not permit debit cards to touch or payment pull from this account. All joint bills paid here. Attach a savings acct and credit card to this account for accruing taxes vacation money blah blah. This will facilitate managing instead of storing your funds.

  2. Push distributions to one or two other individual accounts on whatever basis works. Cash groceries incidentals. Debit cards here.

  3. Use 1 joint credit card for cash back that is paid in full monthly.

  4. Use one budget based on all funds in all accounts such as YNAB. Amounts put on credit cards are put in this budget so there is not a line item for debt payments.
  5. Account propagation will make life hard and skew your view of your actual disposable income. Don't.
  • If you have all your accounts budgeted in YNAB, it doesn't matter how many accounts you have. As long as all income is tracked in YNAB you can transfer money to any number of off-budget personal accounts and it will be accounted for. – nullability Dec 2 '14 at 19:18
  • I agree, nullability, it's easy. I in fact have about 20 of these because I'm an idiot. – Mary Dec 2 '14 at 22:23
  • A better response: YNAB makes tracking a lot of accounts possible. I track PayPal, flexible spending accounts, kid-accounts, loans both on and off budget. If our questioner chooses to not use this tool, a very simple structure will be a good place to start. The main problem I've had with multiple accounts is in matching each to planned outflows. – Mary Dec 2 '14 at 22:46

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