Starting the journey of marriage is typically filled with love, partnership, and the delightful dance of shared responsibilities, including sharing finances. For our millennial and Gen-Z lovebirds, what does the merging of finances really look like nowadays?
Join us on this exploration as we delve into the creative ways modern couples are weaving together their finances. From the different options available nowadays, to the traditions of joint accounts and the security of personal savings, let’s discuss all things that happen in your financially ever after.
This article is guest written by Emily Luk, CPA, CFA, the ceo and cofounder of Plenty, a wealth platform built for modern couples. Plenty makes it simple to invest and plan towards your goals together, while bringing access to the financial strategies of the wealthy.
Introducing: the old school joint account
To get a joint bank account or to not get a joint bank account, that is the question. Nearly 85% of couples end up opening a joint account around marriage, though far fewer begin exclusively using joint accounts. For most couples nowadays, the joint account is a new account on top of what you each already have.
In the world of finances and relationships, joint bank accounts have long stood as a symbol of unity and shared responsibility. It’s more than just a practical step; it’s a symbolic bond of truly being a “team.”
And guess what? Combining your finances in a joint bank account brings an unparalleled level of transparency into the mix. In a culture where money is the number one cause of divorce, transparency is key.
The more you both understand about each other’s finances, the more you can build as a team and share your thoughts and concerns. In turn, this reduces the chances of disagreements.
But we’ve all also heard the horror stories – accounts being emptied overnight, unexpected account closures, theft, and more. As the children of a generation with the highest rate of divorce, we may be more wary about sharing our finances compared to other generations.
For Modern Couples Merging Their Finances
At Plenty, our mission is to help families build wealth together. And we believe in the key of working together as true partners, while also remembering that security and safety are important. We’re excited to share that we’re offering the *NEW* joint account. The joint account that should have existed for decades.
When you open a joint account, we ask partners to decide on a maximum withdrawal limit. If one individual attempts to withdraw more than that amount, both partners need to login and provide authorization. It’s just one more example of how we’re modernizing shared finances.
Option 1: The what’s yours / mine / ours
Increasingly, this is the most common way that dual career couples choose to merge finances. Couples keep a set of their own accounts, open up a new set of joint accounts, then decide what % they keep in their individual vs. shared accounts.
Whether you have one account that’s solely yours or multiple, having something of your own can foster autonomy and allow for personal spending without judgment.
Personal accounts could be a checking account where you stash 10% (or whatever floats your financial boat) of your paycheck. A credit card where you charge your treat purchases or buy presents for your partner. Or an investment account, where you like the privacy of making your own decisions. Or a safety net account like your retirement accounts.
Increasingly, couples with separate accounts share visibility into some of their accounts and talk transparently about where they are: independently and together. It’s finding the ‘just-right-porridge’ temp for ‘me’ and ‘we’ to both build together and feel independent.
This magical balance ensures everyone’s thriving individually, bringing their A-game to the partnership. From reducing resentment to preserving the spark of romance, autonomy is the secret sauce for a resilient and vibrant marital journey. Stay tuned for more legal love wisdom!
Option 2: The join-it-all approach
This approach is most common for individuals with a single-income household structure, or couples who got married in their early twenties. Some may call this the “traditional way” of combining finances.
For starters, only using joint accounts is waving goodbye to a certain level of financial autonomy. If you’re someone who values having 100% your own financial space and decision-making power, merging accounts might feel like handing over the reins – as if you’re losing out on the freedom of financial decision making you’ve been so accustomed to for years.
Money can be a touchy subject, and fully joining your finances may create new, unexpected pressures. Deciding on spending habits, budgeting priorities, and financial goals can sometimes lead to heated discussions or unwanted tensions.
Unraveling fully joined finances can also be a complex process if the relationship hits a rough patch, especially without a prenup. If the marriage ends in divorce, and you do not have a prenup, untangling joint assets and debts can add an extra layer of stress to an already challenging situation.
Option 3: The what’s yours-is-yours
This approach is most common for individuals who highly value financial independence. About 15% of couples use this approach and it’s most common amongst couples who each independently have a high net worth.
This option provides the most independence and autonomy – each individual continues deciding how they spend, save, or invest. They can choose to share details with their partner when they choose, if they choose.
This approach is usually the trickiest if you’re actively working towards financial goals together… planning for a house? Kids? It adds more layers for coordination and communication.
This option is most common for couples who don’t have as many shared or intermingled goals (ie. couples getting married later in life, who may not be planning for kids or already own a home).
Final Thoughts
In the ever-evolving landscape of modern relationships, there is no one-size-fits-all approach to merging finances. Whether you opt for the all-joint-accounts route, prefer 100% financial independence, or choose a hybrid approach, the key is open communication and a shared understanding of your financial goals.
Financially ever after is possible, and with the right approach, couples can navigate the intricacies of money management while building a beautiful future together.
If you and your partner are actively navigating how to merge finances, look for a platform built just for couples like you. Plenty was built by a husband-and-wife team, to support the various ways that modern couples manage their finances together.
With Plenty you can:
- Link your separate accounts and get a bird’s-eye view of your combined financial picture; flexibly setting accounts as shared or private
- Invest and save towards shared goals like weddings, a downpayment, kids, or retirement
- Track your shared and individual spending
- Manage your shared net worth over time
- And much more!
Plenty brings you and your partner together on money, helping you communicate better and achieve your financial goals sooner. It’s your easy, modern solution for managing money as a couple.
Emily Luk, CPA, CA, CFA. Emily is the CEO and co-founder of Plenty. Started by a husband and wife team, Plenty is a wealth platform built for modern couples to invest and plan towards their future, together. Previously, she was VP of Strategy and Operations at Even (acquired by Walmart/One) as they scaled to support millions of individuals and move billions of dollars. Before that, she was a founding team member of Stripe’s Growth and Finance & Strategy teams. She began her career as a VC, and was one of the youngest nationally to complete both her CPA and CFA designations.
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