I’ve discussed before joint or separate accounts and come to the conclusion it doesn’t really matter. It matters only to the people involved.There are successful relationships with completely separate money and successful relationships with completely joint money.

But what are the pros and cons of each situation?

The pros for sharing money are of course easily keeping track of all spending and savings.  There is one account and it’s easy to budget because you can track all incoming income.  It makes savings a lot easier as well because you know what 15% of your gross total income is.  Also it’s easier to diversity investments because you are able to treat all investment accounts like a Roth IRA, 401k as one large portfolio.

What are the cons?  Well with two people in control it can be easier to overdraw or overspend on one account.  It’s possible that the couple will fail to communicate, and then spend $200 on car repairs or $100 on eating out.  Also perhaps one person is running the financial show and thus in “control” of the relationship.  And perhaps you constantly have to “Ask” the other person if you can spend $X on something.  There is a lack of autonomy.

But how does this compare with Separate Accounts?

The pros for separate accounts are that only one person is in control of making it less likely to overdraw or overdraft.  As an individual you don’t have to justify your purchases or spending habits.  Perhaps it’s set up that after you give 50% of your salary to the “Common Expenses” account, the rest of the income is yours to do with as you choose.  There is a lot of freedom in this sort of account management.

Are there any cons to separate acounts?  Of course.  In any system you pick there will be negatives.  If you have different spending and saving habits one partner can be in debt without the other person knowing.  It can be hard to save for big ticket items like college, new cars, retirement, vacations if you have unequal salaries or are not saving the same amount for those items.  Lack of savings can lead to resentment between the partners.

So neither situation is ideal.  But it really depends on which situation you feel more comfortable handling and are able to adjust to with your partner.  There is no one size fits all hat.  And many times it can be a combination of situations, or the sharing money issue can change depending on financial circumstances like job loss, disability, or staying at home with a child.  You just have to work with the situation and it’s potential problems.