We’re getting married. Should we merge accounts or keep them separate?

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Q. I’m 35 and about to get married. We both have separate investment and bank accounts. What are the advantages of keeping things separate versus having joint accounts? We’ve both been established and we’re not kids, so we don’t want to cause problems for each other if we look at things with money differently.
— Groom

A. Congratulations on your wedding.

Starting a new life with someone you love brings great joy, but it can also cause one to feel nervous as marriage inevitably creates new challenges.

One of the most common challenges is learning how to handle finances, said Howard Milove, a wealth advisor with Access Wealth in East Hanover.

He said there are typically three options for handling money when you get married: keep your finances separate, combine all your finances or meet somewhere in the middle.

There are advantages to keeping your finances separate, Milove said.

“Doing so allows individuals to maintain financial independence and control over their money and spending habits,” he said. This method may also help to avoid arguments about spending habits, budgeting, and saving goals.”

It also offers a degree of privacy, which may be desired by those who are used to managing their own finances, he said.

But there are also disadvantages.

“Maintaining separate accounts and splitting expenses can be time-consuming and requires more administrative work and record keeping, particularly if both partners earn an income and have individual bills to pay,” he said.

It can also lead to unequal financial contributions. For example, if one partner makes significantly more than the other, one may feel they are contributing more than their fare share.

Finally, he said, if couples are not actively working together to achieve shared financial goals, such as saving for a house or retirement, keeping finances separate can make it more challenging to accomplish these goals.

Having a joint account has its own set of advantages and disadvantages.

A joint account can make it easier to manage shared expenses, such as rent or mortgage payments, household bills and groceries, Milove said.

It also encourages financial teamwork, making it easier to earmark money for a common financial goal, such as saving for a down payment on a house, he said.

Finally, having a joint account can build trust between partners and promote transparency in financial matters, he said.

However, having a joint account can make individuals feel like they have lost some of their financial freedom, as all income and expenses are shared, Milove said.

“It can also lead to disputes over spending habits if one partner feels the other is overspending or not contributing equally to shared costs,” he said. “Finally, having a joint account increases the risk of financial abuse, particularly if one partner has more control over the account or is using the account to exert control over the other partner.”

The other option is to meet each other in the middle, merging finances halfway.

This could involve maintaining separate accounts for personal spending and saving habits, he said.

A joint checking account could be used to pay everyday expenses such as groceries, and a joint savings account could be used to save for an agreed-upon financial goal such as a new home, he said.

Milove said there are advantages to this method.

“It encourages teamwork, allowing couples to work together toward common financial goals while maintaining some financial independence,” he said. “It promotes financial transparency and open communication between partners, helping to build trust and preventing misunderstandings over money matters.”

Additionally, it can provide flexibility for couples with different financial goals or spending habits, allowing them to contribute to shared expenses while maintaining control over their own money, he said.

Like the other methods, there are also disadvantages to consider.

For starters, this method may not offer enough financial freedom to those who are used to managing their own money and expenses. This can lead to conflict if partners have vastly different spending habits or goals, he said.

“A hybrid approach also requires continuous communication and coordination to ensure that contributions are made consistently and expenses are split fairly,” he said. The concept of `split fairly’ raises another potential disadvantage. Merging finances halfway can become complicated if one partner earns significantly more than the other, owns more assets, or has substantially more debt than the other.”

Ultimately, whether to keep finances separate or combine them is a personal decision that should be based on the unique needs and preferences of each couple, he said.

“Communicating openly and honestly with your partner about your financial expectations and goals is essential,” he said.

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This story was originally published on April 26, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.