Why You Should Keep Finances Separate
In recent years, more and more couples have been choosing to forgo maintaining one bank account for all their expenses and opting to control their own finances. While there are many ways your family could decide to do this - “yours, mine, and ours” accounts for example - keeping your earned money separate is one of the best ways to safeguard yourself should anything go wrong.
Even if you and your spouse have already decided that your money will be shared in the marriage, you always have the option to change your mind. If you are still debating on what to do with your finances after the big day, here are five reasons why you should consider passing on a joint account.
1. Financial Independence
Much of our adult life, pre-marriage, is spent independently managing finances so you can have complete control over your budget and spending habits.
With student loan debt, retirement plans, car payments, and other necessities, being able to determine where you put your hard-earned money can make the difference when needing to pay something off.
Keeping separate accounts allows you the freedom to spend your money on your own terms, without having to worry about what your partner thinks of your habits. This also eliminates the need for a “money manager” in the family, so you can have more confidence and self-assuredness when making financial decisions.
2. Equal Responsibility
Putting all of your money into one account comes with bills and other financial obligations being pulled from this one place — without each spouse knowing whose money is making certain payments. With a joint account, you will truly never know who is bearing the burden of bills and debt.
Choosing to keep money separate allows for each spouse to know that they are contributing equally to the finances in the family and creates a more equal home environment.
3. Protect Your Finances
If you never had a conversation about finances before getting married, you may not know about each other’s credit score, amount of debt, or other crucial information regarding their accounts. This means that once all your money goes into the same place, your credit and finances get hit hard by the other person, which can affect your ability to make investment decisions in the future.
Should you be bringing a significant amount of debt into the marriage (and subsequently into a joint account), your spouse has to take on some of that responsibility — even though they may not have any debt of their own. This will ultimately cause an unnecessary amount of conflict between you.
4. Reduces Conflict
A study of divorcees found that upwards of 41% of marriages end because of money disagreements. Likewise, another study found that financial issues early on in the marriage are a clear predictor of whether the marriage will last.
It’s no secret that money has the ability to make people act differently — each person has their own unique spending habits and method of maintaining their finances. When you bring two conflicting financial ideologies together, it can lead to immediate conflicts and disagreements about how you should be spending. Keeping separate accounts allows for more breathing room in your marriage to make certain that you can manage your money in the way that works best for you.
5. One Less Thing to Divide in a Divorce
This one may seem pessimistic or maybe even a little obvious, but keeping a joint account adds an extra layer of debate during divorce proceedings. Colorado is a marital property state, which means that any money or debt will be divided equitably depending on the value of shared assets - including your own retirement plans and stock options. Separate accounts helps the court know exactly what each spouse brings into the marriage and can eliminate that extra fight over the financial division.
Any Questions? We Can Help
Law Office of Greg Quimby, P.C. is a family-owned and operated law office that has been keeping couples’ best interests in mind since 1998. Our team of attorneys has seen their fair share of financial disputes during divorce and mediation and understands the burden that this can be on families.
If you are thinking of divorce but are concerned about how your finances will be affected, call (719) 212-4227 today to schedule a free consultation.