Studies indicate that financial disputes are one of the biggest reasons for disputes among married couples that can lead to divorce. This usually happens when couples put off having a clear discussion about money, which can lead to frustration and disappointment down the line. Couples may consider opening a shared account to pool their finances when getting married. If they have to pay off certain loans or make monthly child support payments, assist them in organizing these expenses with budgeting tools like a child support calculator.
But even when there’s complete transparency between spouses, misunderstandings can arise. It’s why family lawyers recommend opening separate accounts. While there’s no single best way for couples to share finances, having a mixture of joint and separate accounts gives you the best of both worlds. There are various benefits of doing so, such as the following:
1. Accommodates Different Spending Habits
When both spouses share a single account, it’s easy to start nitpicking each other’s expenses. Even if you and your spouse are similar in many ways, your spending habits may be different. And no matter how close you are, explaining each purchase can get exhausting after a while. Over time, it can lead to resentment, so it’s better to avoid this route altogether by keeping separate accounts.
2. Keep Your Assets To Yourself
As more people are getting married at a later age, most of them have some wealth by the time they settle down. This can be in the form of savings or inheritance that you may not want to share with your spouse. When you keep this money in a shared account, it’s regarded as marital property, and your spouse is entitled to a share in the event of a divorce. By keeping an individual account, you can keep that money aside for personal financial goals.
3. Helps You Save For Individual Goals
Just because you share a home doesn’t mean that you have the same goals. Sure, major financial decisions that require saving, such as buying a new car or going on a vacation, are made together, but what about others? Maybe you want to purchase VIP tickets for an upcoming concert, or your spouse wants to purchase a new sound system. Regardless of your goals, having a separate account allows you to save for them without guilt.
4. Build Your Own Credit Score
Having an individual account encourages you and your spouse to build your own credit scores. This is important for a number of reasons. If you don’t have an individual account and all the bills are in your spouse’s name, it prevents you from building credit. Consequently, you won’t have any credit history in the event of a divorce or if your spouse passes away. Not to mention, improving your credit scores over time provides you with more borrowing opportunities in the future, whether you stay together or split up.
5. Each Partner Understands Finances
It’s common for couples to have one spouse who takes up the responsibility of managing finances. From budgeting for everyday expenses and setting up retirement accounts to paying utility bills, they do it all. Meanwhile, the other spouse is hands-off when it comes to budgeting. However, this can lead to various challenges in the event of a divorce or if the more financially savvy spouse passes away.
Managing finances later during adulthood can be challenging if you’ve never written a check or accessed your online banking account. Keeping separate accounts is one way to ensure that both spouses become financially savvy. When each of you is in budgeting, you’re better equipped to take on more responsibility if needed.
6. No More Sharing Debts
Nowadays, it’s common for people to have some financial obligations before they get married. This can be in the form of student loans, child support from a previous marriage, and more. When you have a shared account, then you may end up sharing your spouse’s debts as well. As a result, your money will be accessible to your spouse’s creditors.
It’s best to have a discussion with your spouse about how you plan to handle pre-marital debt to avoid potential misunderstandings.
7. Gives You Access To Cash During a Divorce
Perhaps the biggest benefit of keeping a separate account is that you maintain autonomy. Quite often, people restrict their spouse’s access to a shared account leading up to the divorce. It can prevent the financially vulnerable spouse from accessing cash flow for necessary expenses. Consequently, they’ll need a court order requesting the spouse release funds for expenses. In this situation, having a separate account gives you access to cash and makes asset division easier.
Some of the common questions people ask regarding separate accounts include:
Can I empty my bank account before the divorce?
Suppose your state considers your account to be separate property, or if you and your spouse have a prenuptial agreement, it’s safe to empty your bank account prior to a divorce. But if these conditions don’t apply, divorce lawyers recommend against emptying your bank account. While you can still do so, it can affect the judge’s decisions during the divorce process.
Can your spouse access your bank account?
Only an account holder can access a bank account, so unless it’s a joint account that names you and your spouse as the owners, they can’t access your account.
What to do if my husband wants separate bank accounts?
If your husband wants separate accounts, it doesn’t have to be a dealbreaker. If you’re worried about them wanting separate accounts, it’s possible that you have concerns. It’s best to communicate with them to avoid misunderstandings down the line. Ask your spouse about how you plan to pool money for shared expenses when you live together. Financial transparency between spouses is a great way to build trust.
How to separate money in a bank account?
The simplest way to separate your money is to have individual accounts and a shared account where both spouses pool money for shared expenses.