By Mike Azzara | American Express Credit Intel Freelance Contributor
8 Min Read | November 30, 2020 in Life
Approaches to marriage and finances appear to differ along generational lines, with millennials tending to separate their finances and older couples merging them.
Continual communication about both long-term financial goals and short-term spending is important.
Although specific approaches are often recommended for certain types of debt – like mortgages, auto loans, and credit cards – what’s best for you often depends on your and your spouse’s personality and preferences.
If you’re 50-or-so years old and have been married a while, odds are you and your spouse pooled all your finances right from the start. You have joint checking and savings accounts and may even have joint credit cards – even though most card issuers stopped offering joint accounts a decade or more ago. If you’re married and under 30, though, it’s more likely you and your spouse have separate credit cards, checking and savings accounts. That generational divide was among the most striking things I found in my research into marriage, finances, and credit cards.
Even beyond the generational divide, there appears to be enormous variation in the way married couples approach their finances. In this article I’ll explore the following aspects based on web research, personal experience, and interviews with about a dozen friends and relatives:
Finances in marriage are often cited as a primary source of couples’ conflict and a leading cause of divorce. Many experts suggest joint accounts when asked how to manage finances in a marriage, the theory being that joint ownership will lead to more communication, which, in turn, leads to better conflict management.1 My research – and experience – suggests the truth is not so simple.
A comprehensive University of Wisconsin-Madison study found that money was far down the list in terms of the number of marital conflicts it causes – after children, chores, communication style, and how to spend leisure time. But money problems had greater significance. In the study’s words: “Marital conflicts dealing with money were longer, especially recurrent, and held higher present and long-term significance to partners’ relationships than other conflicts.”2
In my interviews, the picture that emerged about how to maintain marital harmony while managing finances was to discuss it continually in order to develop deeper understanding of your finances and more satisfying compromises. Whether couples maintained separate or joint financial accounts was nearly irrelevant. For example:
For some couples, the answer to this question is “yes.”
While for most married couples the question of separate or joint checking and savings accounts breaks down along the generational divide, I ran into a few who opted for “all of the above.” My wife and I – and every couple I know our age – have joint accounts; my married kids and most couples I spoke to their age have separate accounts. But some had joint accounts plus their own separate accounts – and they’re not alone, according to Investopedia.3
The challenge here is how you use these core tools – checking and savings accounts – to manage joint finances, including debt, short-term household expenses, and long-term financial goals like saving to buy a home or for retirement. Each approach has advantages and disadvantages.
|Account Approach||How It Works||Advantage||Disadvantage|
|Separate||Incomes go into individual accounts and you split all expenses.||Privacy – nobody else sees your spending habits.||Workload to continually figure out who owes how much to whom.|
|Joint||Both incomes go directly into joint accounts to pay all expenses.||Simplicity.||Resentment may build if one income is much higher, or one partner is more “spendy.”|
|Both||Both incomes go to joint account and an agreed amount transfers to individual accounts.||Combines simplicity and privacy – household bills paid from joint account, but private accounts for personal spending.||More accounts to manage.|
Though commonly asked, this is usually a misleading question. Almost no card issuers offer joint credit cards anymore. The real question is whether to have separate credit card accounts or have one of you be the primary account holder and the other be added as an additional card member, aka authorized user.
The main issues between those two approaches are fairly similar to those for joint bank accounts. Do you care to keep your spending private? Are you OK with having more accounts to manage? The people I spoke to do it various ways:
Experts prefer a clear approach for two out of three of these typical kinds of debts that married couples encounter:
It’s important to know that there’s no such thing as a joint credit score. Your score is tied to your Social Security number and is yours alone. But if you have jointly held debts, they affect both your credit scores. That’s a mutual benefit if payments are consistently made on time and, of course, a mutual detriment if they’re not. For more, see “What Affects Your Credit Score?”
When it comes to marriage and finances, people tend to think first about whether to hold joint accounts or keep them separate, whether for checking and savings, loans, or credit cards. But in reality, either approach – or a combination – may be best for you depending on your and your spouse’s personality and preferences. The key to maintaining monetary harmony in a happy marriage is to talk often about your long-term and short-term financial goals and preferences, no matter how you structure your marriage’s financial logistics.
1 “Top 6 Marriage-Killing Money Issues,” Investopedia
2 “For Richer, for Poorer: Money as a Topic of Marital Conflict in the Home,” Lauren M. Papp, University of Wisconsin-Madison, Dept. of Human Development and Family Studies
3 “Managing Money as a Newly Married Couple,” Investopedia
4 “How To Title Your Cars To Limit Liability,” Rodgers & Associates