You share your lives. But what about your bank accounts?
Census data shows the finances of American couples are drifting apart, as an ever-growing share of married partners keep separate accounts.
Survey data suggests younger Americans may be driving the trend, with Gen-Z and millennial couples far more likely to keep their funds separate than Generation X and boomers.
Common sense suggests separate accounts are a win-win. Both partners reap a measure of financial independence. Neither can guilt the other over an impulse buy. If the partnership ends, your funds are already divided.
But there’s a trove of academic research on the comparative merits of joint and separate bank accounts, and it tells a different story.
"The research suggests having joint
accounts is a positive thing for marriage," said Jenny Olson, an assistant professor of marketing at Indiana University. "You’re able to maintain that sense of 'we.'"
Roughly 40% of married couples keep all of their money in joint accounts, as of 2023, according to the U.S. Census Bureau. About 23% of couples have only separate accounts. The remaining 38% have a mix of separate and joint accounts.
Joint or separate bank accounts: Which are better in marriage?
In a groundbreaking 2023 study published in the Journal of Consumer Research, Olson and other researchers studied newlyweds over time and found a causal link between banking habits and marital harmony.
Researchers started with 230 couples who were engaged or recently married and kept separate bank accounts. For the study, some couples were instructed to merge their accounts. Others kept their funds separate.
Two years later, couples who kept their money separate showed a marked decline in marital harmony.
That dropoff came as no surprise. Studies consistently show marital satisfaction erodes after your wedding day, a phenomenon that presumably inspired the term "honeymoon phase."
Yet, the researchers found that couples with joint bank accounts maintained that honeymoon buzz for the full two years.
The study found, in effect, that a joint bank account makes a happy marriage.
"When you have joint accounts, everything is open. There’s more transparency," Olson said. "There’s less opportunity to hide things from your partner. You’re more likely to have joint financial goals. It preserves the 'we' versus 'you and me' mentality."
Olson conducted the study with fellow researchers Scott Rick of the University of Michigan, Deborah Small of Yale University and Eli Finkel of Northwestern University.
Other studies have shown a correlation between joint accounts and marital bliss. One paper, published in 2022 in the Journal of Personality and Social Psychology, showed that couples with pooled finances "experience greater relationship satisfaction and are less likely to break up." Researchers leveraged data from multiple studies.
Here are 5 reasons to consider separate bank accounts
Now that we’ve made a case for joint bank accounts, let’s hear the argument for separate accounts.
America has become a nation of two-income couples. Adults are marrying later in life.
Both of those demographic trends point to reasons why couples might want to keep their finances separate.
In many cases, both partners have significant assets and debt coming into a marriage. Combining them might not always be the best move.
Here are a few potential reasons for keeping at least some finances separate.
Financial independence. With separate accounts, partners can spend money without fear of being monitored or judged.
"The merit to having individual accounts is, there’s a sense of autonomy," said Jeffrey Mellone, executive wealth management advisor at TIAA Wealth Management.
Protecting premarital assets. If you enter into marriage with a $50,000 savings account or a $100,000 inheritance, that asset isn’t technically marital property, "so it may not make sense to merge it into a shared account," TIAA advises in a post titled, "7 reasons why separate accounts are good for your marriage."
Protecting a partner from debts. If one partner has big debts, a joint account could leave the other partner vulnerable to collection efforts and other repercussions, SoFi reports. Separate accounts can help shield the debt-free spouse.
Emergency funds. Should your marriage end in acrimonious divorce, you’ll want to have funds in your own name that you can spend to rebuild your life. Financial advisers often talk of "emergency breakup funds."
Irreconcilable financial differences. A couple may be soulmates but have "completely different spending habits and completely different approaches to money," said Brian Walsh, head of advice and planning at SoFi, the financial services company.
For that couple, separate accounts might not be a bad idea.
Realistically, it’s hard for most couples to comingle every last dollar. Yes, you can share bank accounts. But what about other accounts?
"There’s more than bank accounts," Mellone said. "There are individual investment accounts. There are retirement accounts, which by definition are individual."
But Mellone said he seldom meets a married couple whose finances are entirely separate, with one spouse paying the mortgage, the other picking up utility bills.
"If they do have individual accounts, usually there’s a joint account for shared expenses," he said.
The most important thing, said Walsh of SoFi, is that couples talk about money and make a conscious, collaborative decision about how to bank it.
"I think the key is that couples just need to talk together and figure out how they want to manage their money, and why," he said.
This article originally appeared on USA TODAY: Joint or separate accounts? The wrong choice could hurt your marriage
