Should couples combine finances or keep separate accounts? One option leads to a happier marriage, study says.

Not being open and honest about money can be a sign that you don’t trust your partner, a relationship killer if there ever was one. It can also mean unpleasant shocks — surprise, your soulmate has a 530 credit score — that stand in the way of those dreams you cooked up together when you were just two crazy kids in love. 

One big decision couples face when they form a household: Should they merge their money into joint accounts, or keep separate accounts?

Why it matters

How couples manage their money isn’t just about making sure the water bill gets paid on time. Discussions about money can get fraught fast and sometimes become proxy battles for bigger issues in the relationship, like who wields more power, whose career is more important, and who does more domestic labor. Money and how we spend it is also an expression of our values. And if you’re not on the same page about your values, then why are you in this relationship?

The verdict

Share the wealth. Use a joint account.

My reasons

The No. 1 reason to share your money is that joint accounts appear to lead to a happier marriage. That lessens your chances of divorce, which can be financially devastating. 

There’s been research suggesting that couples who share their accounts are happier than those who don’t, but the link was only correlational, so it wasn’t clear whether “joint accounts make you happy or if happiness makes you open a joint account,” said Scott Rick, a University of Michigan associate professor of marketing. He co-authored a new study that is the first to find a causal relationship between joint accounts and happier marriages. 

Rick and his co-authors tracked 230 newlywed couples for two years. One group of couples had to open a joint account, one had to keep their accounts separate, and a third could do whatever they wanted. Researchers checked in with the couples every few months to ask them how their relationships were going. The couples who kept separate accounts or did whatever they wanted (most of whom kept separate accounts) saw the “typical decline” in relationship satisfaction, where they were happiest at the start of their marriage and satisfaction dropped after that honeymoon phase, Rick said. 

But the joint couples stayed at the initial level of happiness, and if anything, their relationship satisfaction “seemed to increase a tiny, tiny bit over time,” he told MarketWatch. “By the end of two years, the joint couples looked a lot better than the ‘separate’ couples and the ‘do what you want’ couples,” Rick said. “Part of that is because the joint couples got on the same page in terms of money matters, it prompted some discussions. They started to see things more eye to eye.”

“You want to get away from score-keeping, which couples can fall into: ‘I did this yesterday, so it’s your turn today,’” he added. “With separate accounts, you really get into score-keeping: ‘Well I paid this, and you paid that.’ You want to get away from ‘his’ money and ‘her’ money and you want to get into ‘our money.’”

The couples with merged accounts “reported higher levels of communality within their marriage compared to people with separate accounts, or even those who partially merged their finances,” said study co-author Jenny Olson, an assistant professor of marketing at Indiana University’s Kelley School of Business. “They frequently told us they felt more like they were ‘in this together.’”

If that’s not enough to convince you, consider the fact that there can be financial benefits to having joint accounts. Keeping all of your money at one bank could help you avoid minimum-account-balance fees, or make you eligible for a higher tier of customer rewards. “Combining assets provides greater ease of management for bills, for planning for the future, and for emergencies,” said Woody Derricks, a certified financial planner with Partnership Wealth Management in Towson, Md., who specializes in same-sex couples. If one person suddenly lands in the hospital, it’s harder for the other to act on their behalf financially if money is in separate accounts, Derricks said.

There’s also the estate-planning aspect, said Kelley Long, a certified financial planner with Financial Bliss in Oro Valley, Ariz. “When you have joint accounts, if something happens to your spouse, your life is so much easier financially. Everything automatically is yours. You don’t have to walk around with a death certificate and go everywhere to claim everything. They always say joint accounts are the poor man’s estate plan.” 

Another point in favor of joint accounts is that sharing money can help control spending. “You might restrain yourself a bit if you know you’re being watched, so it might tamp down some more extravagant spending,” Rick said.

Is my verdict best for you?

On the other hand, keeping separate accounts just works better for some couples. Long’s parents have been married 51 years and have never shared money, she said. They’re both financially responsible, but they have opposing money personalities. One loves to spend and the other hates it, and they also have a disparity in their incomes. Keeping separate accounts was “a loving decision” that let them “maintain maximum happiness in their marriage without having to change their personalities,” Long said. 

It can also be helpful to keep separate accounts if you meet later in life and have long-established financial habits, or have children from a previous marriage, financial planners said. 

Another reason for later-in-life couples to keep finances separate is to preserve a step-up in basis for highly appreciated assets, Derricks said. “If someone owns an investment for decades that has appreciated nicely, they may want to keep that in their own name so that if they’re first to pass away, their spouse or partner receives it with a full step-up in basis and can liquidate it after death and not have to pay capital-gains taxes,” he said.

Couples can also try a happy medium between joint and separate, with one shared account for household expenses, and separate accounts for individual spending on things like expensive hobbies, Rick said. “Everyone needs a room of their own, so to speak, and space,” he said. “Joint is definitely better than pure separates, but if you have the time and energy, I would say attach some separates to the joint.”

Tell us in the comments which option should win in this Financial Face-off. If you have ideas for future Financial Face-off columns, send me an email at [email protected].