A common topic of discussion for the newly married is how to handle finances. Some couples prefer to keep their finances separate, while others combine at least some of their assets into joint accounts. The most appropriate choices depend on a number of variables, including your respective spending styles and your collective financial goals. Combining finances can offer certain advantages that separate accounts cannot.
Ease of Access
When spouses combine finances, either spouse can easily access the money. For example, if you are a stay-at-home mom, your personal account might not have enough money in it for you to conduct the day-to-day business of the household. With combined finances, any money that comes in to the family is deposited in the same account, so you don't have to worry about which account your money is in. If you had maintained separate accounts, you might not be able to access the money in your spouse's account without written or at least verbal permission, which can be an inconvenience.
Combining your loan accounts, such as credit cards, could help your future ability to get additional loans. If you share a credit card and make consistent, timely payments on it, both of your credit scores will improve. If you had kept that credit account separate, only one of you would have the benefit of a higher score, which might hurt you down the road when you apply for additional credit. Additionally, with a joint credit account, either spouse can access the credit line.
Discounts and Bonuses
Depending on where you invest your money, larger balances in your accounts can lead to better service and pricing on any financial services you may need. For example, if you want to borrow against your investment account, you can generally get a lower interest rate if you have a higher balance. Similarly, a larger savings account can often translate into higher interest rates from banks. You may also be eligible for premium services that financial institutions offer only to clients with large accounts.
For some couples, combining finances and filing a joint tax return can result in significant savings. This is particularly true in cases where one spouse earns more income than the other. Since joint tax filing brackets are exactly double the "married filing separately" brackets, more of a higher-earning spouse's income would be taxed at a lower rate. Additionally, filing a joint tax return eliminates the time spent on filing two separate returns. Usually, filing a joint return is beneficial for couples that don't have excessive medical expenses, personal casualty losses or other itemized deductions.
For some spouses, a certain level of trust is violated if either partner is unwilling to combine finances. Combining finances indicates a willingness to trust your spouse, even if you are the one making more money. With combined finances, all financial transactions are easily visible to both spouses, which might help get you on the same page in terms of goals and spending habits. It can also help you develop a "team effort" feel with your spouse regarding your finances.
After receiving a Bachelor of Arts in English from UCLA, John Csiszar earned a Certified Financial Planner designation and served 18 years as an investment adviser. Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.