Natali Morris Blog

September 4, 2015

Should Couples Have Separate Bank Accounts?

Here is a great question from a fellow CHO: Do my husband and I maintain separate checking accounts? 

There is no once-size-fits-all answer but I will make the case for separate AND joint accounts. Let me explain. 

When I first began cohabiting with my husband, I tried to keep completely separate accounts but that did not work. I got prideful about paying for half of everything and even paying for all of some things that we should have split (like the huge hospital bill when our son was born!). Then I resented him when I didn’t ask for fair splitting. I was like that lunatic guy in The Joy Luck Club. That wasn’t fair to my husband, who is more than generous but didn’t know that I was being a martyr. Oh money. It makes people act like such dipshits. 

Then I found Suze Orman’s advice about personal vs joint bank accounts. The woman is genius! Her formula goes like this: You each keep your own separate checking and savings accounts. Then you add up your household expenses and you each contribute an EQUAL PERCENTAGE of your income to the joint accounts to pay for joint expenses. What is left over, you keep to yourselves. 

For example, you make $4,000 per month (that’s take-home, not gross pay) and your spouse makes $4,500 per month. Your monthly expenses add up to about $6,000 per month but you’d like to keep a little padding in the joint account for date nights and emergency plumbers. So you aim to keep $6,500 per month in your joint checking account. How? 

Spreadsheet time! (I need a jingle for every situation that calls for a spreadsheet.) 

I have a spreadsheet that I will send you by clicking below. You input your expenses into the cells in green and my formulas will help you calculate your joint contributions. You know you want it! Clickety click! 

Here is how the spreadsheet works: In the example above, your total contributions have to add up to $6,500. If you put 80% of your monthly income, you’ll be contributing $3,200 and you’re spouse will be contributing $3,600. That adds up to $6,800 in the joint account which is more than enough. You can actually dial back a few percentage points to 77% and still hit your goal. 

Now do the same for savings. What is your joint savings goal? What is the percentage of contribution you need to get there? Most likely an extra 10% from each of you will be awesome and help you reach your goals. 

So you take your paycheck (net, not gross), subtract your living expense percentage (77%), then subtract your savings expenses (10%), and what you’re left with is yours to spend on yourself. In this case, 13% is yours to do with as you please. Shoes! Shoes! Shoes! Massages! Rent The Runway Unlimited Membership. The ole’ Ball and Chain cannot have an opinion on those purchases since they are made with your own money! 

I’ve always followed this rule religiously but it only works for dual income families with regular paychecks. And now that no longer applies to us so we’ve had to change the rules.  

In the beginning of our relationship I was full-time at CNET. When our children were born we decided that I would freelance so that I can be home for our family as much as possible. That means that my paychecks come in fits and spurts and some months not at all. I’m not complaining. I still have respectable earning power but freelancing means that we cannot count on my regular 77% to pay our bills. 

As I’ve addressed previously, this was hard for me. I had to make an emotional adjustment to paying our bills with my husband bringing home the bacon. Even typing that out, I hate myself a little. I don’t want to talk about how my contributions to the home are just as valuable. That’s a subject for another post. The point is, not contributing your percentage can feel crappy if you’re used to doing it. But it got to the point where it no longer made sense for me to maintain my own checking account and try to pull my percentage contributions from my savings. I was doing it for the wrong reasons: pride, not practicality. 

I closed my checking account last year but my husband maintains his still. He contributes 100% of the percentage to get us to our living expenses and savings goals but gets to keep what is left over in his account to buy apps on iTunes, URLs from Hover, and lenses for his cameras. The man is random.

On months when I do have income, I split it between our joint account and my own personal no-fee savings account. Sometimes I use it to pay larger bills like insurance or taxes so that we don’t have to move money around for those doozies. 

If one spouse does not have income, I still recommend keeping both separate and joint accounts. The earning spouse will contribute 100% of the joint budget to the joint account and still keep what is left over in his/her own account like my husband does. It can prevent the earner from resenting the non-earner, and vice versa. The non-earning spouse can keep a no-fee account for if and when earning situations arise. 

Maybe this is a temporary solution and maybe it isn’t. Maybe I’ll go back to my own checking account and our percentages or maybe I should just get over my pride about it. My husband says I’m looking at it wrong. It isn’t a failure of my ability to bring in a regular paycheck. Instead, he says it’s proof of faith in our family decisions. Maybe. I do miss my personal account to use for expensive night cream. Those purchases carry more guilt when they come from a joint account. 

I didn’t intend to get self-reflective tonight but personal finance is oh so personal.

I still 110% believe in Suze Orman and all of her formulations for my family. She gets me. But every family is different.  I’d love to know how other couples work this out! Do share! 

And one more time, about that percentage worksheet, click below to get it!

16 responses to “Should Couples Have Separate Bank Accounts?”

  1. Avi Greengart says:

    We have a single joint account and discuss purchases/spending habits together. Requires slightly more communication and a lot less hassle.

  2. Rob says:

    I never read the Suzie Orman article, but have used the same process since getting married 5 years a go. I swear by it!!

  3. ana says:

    24 years of marriage and we use your formula. I need my shoe budget, so after I’ve contributed to the family budget, the rest is mine to do, but as I desire. Love the concept and it’s worked.

  4. Jesse says:

    We do something similar but slightly different (unless I am misunderstanding your percentage ideas lol).
    We have three accounts – a joint and two personal. Our income is fairly reliable. My wife makes about 2x what I do (she’s in medical field – I’m blessed). We both work approx 40hrs per week and and we both work hard but have fairly reliable income. What we do though is we decided on a set and equal amount that we each get per month…an allowance per say. All checks direct deposit into a main account and then our monthly equal allowance goes into our insividual. We like this because a large majority of our purchases we both enjoy…restaurants, TV, etc…it comes out of joint. But if she wants shoes it comes out of her personal. By having even amounts it eliminates any potential resentment since the joint account where the majority goes is both of us. We both put forth 100% effort towards working hard – so we both get an even amount of allowance…even though her job pays more. Works well for us.

    • Natali Morris says:

      This is actually a really good idea. I’ve thought about depositing all funds directly into the joint account and taking our allotments into individual accounts from there. It’s just a question of the direction of the arrows but this might be easier.

      • Jesse says:

        Sorry, just saw this reply. Ya it is really easy…if you view marriage as truly a partnership a large majority of your purchases over 100 bucks or so would end up coming out of the joint account. So really the allowances are for those indulgences that truly only you would enjoy (shoes?). What this also does is causes you to appreciate those indulgences even more because sometimes it may take a month or two or saving "allowance" for a purchase that technically you could easily purchase out of the joint budget. If you shift your focus away from my money/your money and view all your work and income as "for the betterment of us" then allowances are great and makes you think below you spend that allowance.
        We have it setup as another "bill" in our joint finances. We both know exactly what we get in personal money each month and if she wants to blow it only shows its hers to spend totally guilt free however she wants..or I can buy the new surface pro 4 in a few months without even conferring because that money is "my money".

        I highly suggest checking out "you need a budget" software… Ynab for is life changing!

  5. John Dudley says:

    Love the article. After 20 years of marriage we have always maintained only had one joint account. We did try the individual accounts, without success (to much guilt of who has more). We have similar formula as some of the other contributors, we have a standing rule that we are allowed to make a personal purchases up to a certain amount ($50). Anything over that must be "approved" by the other person. And this seems to have worked out well for us. For the first 15 years of marriage I was the bread winner, but over the past few years my wife has advanced in her career and is doing substantial better than I. But with are formula set already, there is no animosity towards one another by making any personal purchases.

  6. Chris says:

    I love the idea of calculating the equal percentages and have downloaded the spreadsheet, but I’m getting a little hung up on how to calculate one aspect. At my work, I have both an HSA (for medical) and an FSA (for dependent care). Those accounts essentially cover all of our childcare and healthcare expenses. However, that also means that I’m paying for 100% of those "budget" items and that money comes out pre-tax. What’s the best way to figure this scenario into the equal split?

    • Natali Morris says:

      Oh that’s a tough one! I had not accounted for that being deducted from one spouse’s paycheck yet still being a family expense. Can you add up the total of that, take half of that value, and then add that much less to the family expense account?

  7. Rick says:

    We have done the joint account thing with equal percentages, but its simply too much work and calculations. Then I started following Dave Ramsey’s advice, the money we make as a couple is ours! Just because I make 75% doesn’t mean 75% is mine. We make 100% and we decide on where 100% goes together, as a team. We were a dual income family but then my wife decided to stay at home to raise our little ones. At times she made ZERO%, but she still had the same personal spending needs, and if not the same, even more (get out of house, spa, away from kids for some fun personal time).

    I’d highly recommend combining your finances, sell out, be ALL in. If you married this person, you married their money habits and earning potential (for better or worse). Percentages divide when in reality we want to combine and come together.

    I look at what I earn as what I earn for my family. I’d find it a bit selfish for me to say, hey, I earn 100% of the money, I’ll just give the family 80% and spend the other on the things I want (even if they might be gifts for the family). Husbands and wives should come together and spend every dollar earned on paper before the month begins.

    Thanks for your opinion though, I can completely and logically see where you can come to these conclusions and truly hope it works out great for you guys!

  8. Brad B. says:

    My wife and I use a joint account but we each have our own checking, with separate banks, that we deposit 5% of each of our paychecks into. This is our money to spend in any way we wish (latte’s for me). We never question each other about the spending either because it simply doesn’t matter. We started doing this because my wife was tired of asking me if it was ok to get her nails done with a friend, I never cared and didn’t like that she thought she had to always ask.

  9. Alan says:

    My wife and I do something similar. We both pay all our income to the relationship and our joint account to cover our bills and then we each get an allowance transferred into our personal accounts. It’s worked pretty well for 20 years.

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