Taking the Plunge: Is a Joint Checking Account Right for Both of You?

According to the server logs, 10% of the search queries used to get to this blog have to do with joint checking accounts, including queries like "married add to checking account" and "dual savings checking account". Clearly a topic of interest.

So assuming you're married, soon-to-be-married, or living with a partner in a long-term relationship, should you take the plunge and set up a joint checking account? Or should you keep separate accounts? In a word: Yes.

Of course, everyone's situation is unique, so you may want to adjust accordingly, but here's what's worked for us:

• Open a joint checking account under both your names, and get a debit card for each of you
• Keep or open a separate, individual checking account for each of you. If you're married, be sure to work with your bank to set up the accounts so that if one partner dies, the account goes to the other partner.
• Classify your monthly bills, identifying all the ones that are truly joint expenses like rent, cable, insurance, groceries, etc. (including any joint savings you might be doing for something like a down payment) I'll call these household expenses.
  
• Decide what percentage of the total household expenses each of you should contribute. This should be weighted according to your relative income: if you both make about the same salary, then just split it 50/50; if one partner earns $60,000 and the other $40,000, then the higher-earning partner should be picking up 60% of the household expenses.
• Have your household contribution direct-deposited into the joint account, and the rest deposited into your personal account (if your workplace won't split deposits, you may need to set up an automated transfer through your bank; another option is to open all of these accounts through ING Direct, which offers great rates and easy online access, including automatic transfers).
• Pick one partner to manage the joint account. The other partner has the obligation to share timely information about any purchases they make (designate a drop-box for receipts). But what if having two cards causes an overdraft? Simple -- you do have that $1,000 padding, right? Since my wife and I did that, we haven't had a single overdraft, despite the occasional crossing of wires.
• Finally (and perhaps most importantly), since the shared expenses are taken care of, what's left in your individual account is, well, yours. That means you can spend that as you'd like without consulting your partner, no matter how silly they think your purchase might be (no way I could have justified my $100 pocket notepad, but I love that thing and use it almost every day).

Though having multiple accounts does add some administrative overhead, the benefit is that you avoid a lot of potential friction caused by -- how shall I say this -- differences of opinion on appropriate spending.

Comments welcome on what joint-account setup works for you.