Joint Accounts for the Long Married (or Married Again)

In the post-wedding blur, some newly married couples never get around to combining their finances. Suddenly, years have passed and they realize that it might be easier for them to manage their money if they merged it.
 
Other couples, on entering a second marriage, might want to combine their financial resources, but face a few sticking points, such as loans and child support from previous relationships.
 
Co-mingling money gets more complicated as you get older and there’s no one-size-fits-all approach, says Mari Adam, CFP, MBA, CRPC, and founder of Adam Financial Associates in Boca Raton, FL. But it’s worth the effort.
 
“Combining assets shows a commitment to the marriage and to being a couple,” she says. “Marriage is about sharing a life together. That’s hard to do if you don’t share your money. However, there are also good reasons to leave some accounts separate. Whatever approach you use, you want both partners to see it as fair and empowering, not demeaning.”
 
According to a 2006 study published in the journal Gender & Society, couples who merge their finances are more likely to stay together than couples who don’t.
 
In first marriages, money is often kept in one account and, for most people, that works fine. In second marriages, it becomes more difficult because partners each have separate obligations, such as children with their first partner.
 
“The main issue in second marriages is that people may have already been through a divorce and they know how traumatic and financially devastating that can be,” says Adam. “They also want to make sure that ‘their’ money goes to their kids and not the offspring of their new husband or wife.”
 
In either case, if you are taking the plunge into joint financing later in life, there are plenty of issues to take into consideration.
 
What Is a Joint Account?
A joint account is one that is owned by at least two people who have equal access. Either owner can make transactions without the other’s permission, apart from closing the account. Joint accounts may include bank accounts, revolving credit lines, stocks, leases and even utilities.
 
How Can We Decide What’s Right For Us?
Before you do anything, discuss the legal consequences of combining accounts, Adam says. For example, you might not want to combine money you earned or inherited before the marriage, so it will remain separate property. You might consider drafting the proper legal documents, such as a trust, to make sure that at your death your money goes to the person you designate—not necessarily your spouse, for example, but rather your children from a previous relationship.
 
Adam also recommends setting “house rules” on spending. For example, you may have a rule where you check in with your partner if you want to spend more than $250 of household money. Or you may decide to not spend on luxuries until you’ve covered your savings targets for the month. “The key is to ensure that both of you are pulling in the same direction,” she says. “You learn a lot about the dynamics of a couple by seeing how they handle money together. Healthy couples tend to have healthy money habits. Dysfunctional couples have dysfunctional money habits.”
 
You can dip your feet into merging money with a shared checking account that is used to pay household or common bills, suggests Adam. Each person can add money to the account in proportion to what they earn or have. One person needs to reconcile the account monthly (or more frequently), make sure bills are paid on time and monitor the credit cards. Set a time once a month to check in with each other to see what you’ve spent and ensure you’re still on track. Check your credit reports periodically. Once that goes well, it’s time to survey all your viable money merging options. Here is what Adam recommends:
 

• Pay proportionately: If your salaries are similar, divide the bills into two equal parts and have each person contribute half. If you have uneven earnings, break down the bills proportionally. If both parties fairly share the expenses, the spouse with the smaller income will feel more empowered, plus the higher-earning spouse will feel less of the burden of paying the bills. 
  “This is a good system because it puts both people on a fairly equal footing,” says Adam. “You’re not perpetuating the ‘I have more money than you so I get a greater say’ school. We’ve seen couples where the lower-earning female spouse is totally impoverished and gets an ‘allowance’ to cover her discretionary expenses. It can be very demeaning.” (That said, according to a study by the Pew Research Center, wives are now emerging as the dominant income providers.)


• The three-checkbook system: Money is divided into “Yours,” “Mine” and “Ours.” Everyone gets a bit of money they can spend at their discretion, plus a joint account for shared expenses. Decide in advance how much will go into each account and discuss what you’ll do if the joint account runs short of money. “You need to make sure with this method, you are both disciplined spenders and savers and are pulling equally toward common goals like retirement and vacations,” Adam cautions.


• Open one “house account”: Both of you keep your own checking and savings accounts, but open a joint account with dual access. Each person puts in their share of the mortgage or rent into the house account. Split shared bills (electricity, cable, groceries) and make sure each pays designated bills. “This option may work well—we do see this a lot with the couples we work with,” says Adam. But you still need to decide how to split bills if one person makes more than the other.


• Go all in: Go for it and just combine everything into joint accounts. Discuss big purchases before spending and consider having regular money check-ins with each other. The key is to keep communication open and non-judgmental. “We work with second-marriage couples who have been together for decades, and over time, they tend to share their money freely with each other and want to provide for the other as long as they live,” Adam says.

 
Maridel Reyes is a journalist based in New York. Her work has appeared in Forbes, Bloomberg Businessweek, the New York Post, USA Today and The Boston Globe.

Illustration by Carolyn Bouchard.

Newly married? Learn more about joint bank accounts for newlyweds.