The practice of couples maintaining separate finances is on the rise as younger generations of Americans tend to marry later in life. Jesica Ray, a certified divorce financial analyst at Brighton Jones, states that the choice to either merge or keep finances distinct varies depending on the unique circumstances of each couple. “Financial discussions are critical for any partnership, especially for those newly married, and there isn’t one definitive solution regarding when—or if—they should merge finances since every couple’s circumstances differ,” Ray notes.
Numerous financial advisors recommend combining finances to foster trust and simplify bill payments and budgeting. Conversely, Ray argues that couples ought to examine their financial arrangements based on personal principles rather than societal expectations. “If your priority is convenience, then joint finances may be the ideal route for you,” she suggests.
“However, if you are comfortable with a bit of complexity, the benefits of retaining assets under your own name can serve as protection,” Ray continues. Beginning with independent finances while having a joint account for shared costs can provide safeguards in the event of divorce, claims from creditors, or if one needs to qualify for government assistance later in life. Ray also points out that maintaining separate finances can enhance a partner’s sense of autonomy, particularly for women striving to build their own financial independence.
Deciding on separate or joint accounts
Jody D’Agostini, a certified financial planner at Equitable Advisors, similarly recommends a balanced strategy, advocating for mostly shared finances but keeping inheritances or substantial financial gifts distinct. “The intention of the person giving it to you is for your benefit alone, not for your spouse’s,” she notes, highlighting the necessity for protection against divorce or financial exploitation.
Inheritances should be placed in individual accounts to preserve their status as separate property. In many jurisdictions, inheritances are not classified as marital assets unless they become mixed with joint funds. Likewise, D’Agostini recommends keeping premarital assets distinct to clarify matters in the event of a divorce, which can be managed through prenuptial agreements.
Another situation where separate finances are prudent is in second marriages, particularly when either spouse has children from prior relationships. Keeping finances individual can help ensure that the assets accumulated by each partner before the marriage are designated for their respective children after death,” D’Agostini emphasizes. She highlights the critical nature of having an estate plan to prevent unintended asset distribution.
While shared finances can provide ease and foster trust, having separate accounts could ensure protection and individual independence. Couples must thoughtfully consider their values, the necessity for safeguarding their assets, and family dynamics before deciding to merge their financial resources.
