There is nothing more emotionally and financially traumatic in life than filing for divorce. Over half of all marriages end in divorce. Although there can be many triggers for divorce, one of the most noted reasons is financial disagreement. This is just one reason to maintain separate bank accounts.
The Case for Maintaining Separate Bank Accounts
Married couples who constantly argue over finances are over 30% more likely to divorce. Couples who start a marriage completely broke and with no assets are over 70% more likely to get divorced after three years. Newlyweds who start a marriage with as little as $10,000 in assets are more likely to stay together past three years.
Money isn’t everything, but you definitely need it to pay the bills. Unfortunately, you can’t always sustain a marriage with love alone. Both partners need to trust in the other’s emotional maturity, financial literacy, and dependability in managing money responsibly. Some spouses may feel a loss of personal independence when they get married. Or, they may fear assuming debt incurred by a financially irresponsible spouse.
Many couples divorce when they realize they weren’t emotionally or financially ready for it after the fact. The key to a lasting marriage is never going to bed angry and to always communicate. Not everyone is able to combine their lives equally with an overriding responsibility to pay the bills. Being madly in love is all good, but there may be several reasons why you’re better off maintaining separate bank accounts for a while.
Community Property Debt
Do you know if you live in a, “community property,” state? If you do, and you get divorced, you may end up paying dearly. In a community property state, all of the properties, assets, money, and debts in a marriage are shared equally – even if only one spouse brought the financial value, or debt responsibility, into the marriage. This is especially true in the case of divorce, annulment or death.
If one spouse is debt-ridden, financially insolvent, or files for bankruptcy, then both spouses are equally responsible in a community property state. You might be legally responsible for the debts and financial recklessness of your spouse, whether your fault or not. Creditors can legally sue you, try to go after your assets, and try to obtain payments from you based on the insolvency, bankruptcy, or outstanding debts of the divorced or deceased spouse.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are all community property states. The state of Alaska allows for people to legally opt into a community property marriage arrangement.
Getting In Sync Financially
It may take time for a married couple to see eye to eye on how to manage joint finances. Having a joint bank account very early in a marriage may lead to distrust – every transaction can be tracked. Also, there may be feelings of lost financial independence and resentment. There are truly no secrets in a marriage. Having separate bank accounts can help a couple get into better financial sync. And, it can help you and your spouse figure out how to get on the same page when it comes to financial management.
Financial Trust Takes Time
There is an old saying that only children believe in true love. Adults understand that you must constantly communicate and work on a relationship. Whether you are a newlywed, or celebrating decades of marriage, it may be folly to assume two people can automatically have the same understanding of financial responsibility, especially based solely on the tenets of love and marriage. It may be better to hold off on the joint bank account until you achieve such an understanding.
Joint or separate bank accounts? Share your thoughts in the comments below.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.