Couple investing: When should you combine accounts or separate them?

To avoid heartbreak, establish healthy communication patterns around money early on. Use “I” statements to express your own relationship to money.

For example, “I find debt to be stressful, and I'd like to avoid increasing my debt burden,” is a way to share with your partner that you're uncomfortable taking on more debt.

Strive to also set regular money check-ins with each other. That can be a monthly money date, when you review your monthly budget and savings. This opens the door to regular communication around money and helps ensure you both look at all the finances at least 12 times a year.

Review your own money first

Before the two of you make any changes, start with understanding what you're each dealing with.

If you've been working for a few years, you may each have a retirement account through work. Perhaps one of you owns property or one of you started investing in college.

To make the best plan for both of you as a couple, you'll each need to understand what you did with money as an individual. Take judgment out of the equation and set up a time to go over all your accounts together.

Consider covering:

• work-related investment accounts
• family money
• physical assets, like property, cars and jewelry
• cash savings accounts
• any automatic withdrawals from your paycheck or checking account

You can also use personal finance apps, such as Empower or YNAB, to better understand your financial situation. This will help you understand where you're each starting from and what accounts and tools are available to you as a couple.

Set goals together

Now that you have a firm understanding of what your money looks like, you can start to define what combining it looks like.

What do you want your money to look like as a couple? Does it make sense to combine everything or just part or nothing? Remember there's no single correct way for anyone to do money. You and your partner should find what's right for you and not feel beholden to any nonexistent standard.

A great way to think about goals is to break them down into timelines. Setting goals for one-year, five-year and ten-year timelines allows you to see what needs to be a short-term focus and what is a longer-term focus.

Talking through your joint and personal goals will shape your finances. If you want to buy a house within five years, it may make sense to open joint savings account so you can each contribute to it.

If you want to be able to max out your retirement accounts so you can leave work at age 55 instead of 65, you may each need to increase your monthly contributions to your retirement plans. In turn, you'll need to talk through how that will affect your monthly budget.

Discuss the investment accounts you have and want

Not all investments are created equal. There are pre-tax investment accounts, like a traditional IRA or a 401(k). There are post-tax accounts, like a Roth IRA. And of course, there are your robo advisors and your taxable brokerage accounts.

Which accounts do you want to contribute to as a couple? Which ones make the most sense to get you to your goals? These questions are particularly important to answer if one of you is a freelancer or part-time worker or if one of you will take time off to stay home with kids one day.

There are penalties and fees for withdrawing money from retirement accounts but none for your taxable brokerage account. Consider this in your investing decisions.

Remember, there really is no single correct way to invest. It's all going to depend on your goals, your income and your ability to invest.

Checking accounts

Checking accounts aren’t investment accounts in any sense of the term, but since they are generally the most active of all financial accounts, they’re well worth discussing. The whole idea as to whether or not to have joint or separate checking accounts is wide open to debate.

Here are the advantages of each type of arrangement.

Joint checking works best when:

• Both spouses are about equally responsible for the financial management
• When it is agreed one spouse will be primarily responsible for the household budget and paying bills
• When one partner has a stronger orientation toward financial management and the other doesn’t
• When one spouse earns all or most of the household income (less justification for separate accounts) — ironically in this case it’s often the non-earning spouse who primarily manages the checking account

Separate checking works best when:

• There’s concern of two people writing checks and running debit cards out of the same account, and the potential for overdrafts
• When the couple isn’t necessarily in agreement about budget issues
• When the income split between the couple is roughly equal, and each have their own set of expenses
• When one or both partners have a significant amount of job- or business-related expenses

It’s sometimes thought a joint checking account between a couple is a way of cementing the relationship. That may be true on an emotional level, but there may be practical issues that make the joint arrangement unworkable.

Savings accounts, CDs and money markets

Savings, CDs and money market accounts are typically the types of investment vehicles a couple will use to pay for intermediate expenses, such as upcoming vacations, replacing components of the family home (roof, carpeting, etc.), replacing a car, or even for emergency savings. Since they are generally used for a common purpose, it makes perfect sense for these accounts to be held jointly.

It’s also important that accounts of this nature represent shared responsibility. That is to say each partner should feel responsible to make some sort of contribution to the account, in order to help fund the expected need.

It’s also much easier to have such accounts held jointly since the activity level — other than contributions — tends to be minimal. Since these accounts often don’t come with checking or debit cards, there’s little chance of either spouse overdrawing the account.

Retirement accounts

There’s not a whole lot to discuss when it comes to retirement accounts, since they are legally established by and for individuals only, and not couples. This applies to all types of retirement accounts, including:

• IRAs
• 401(k)s
• All employer-sponsored plans
• Some self-employed plans

An account can only be held in an individual’s name; however, you’re typically required to provide beneficiary information, which is usually your spouse. In the event of the death of the owning spouse, the account can automatically transfer over to the other.

Business accounts

Business accounts can be something of a gray area, and whether they are held individually or jointly depends mostly on the business formation itself.

For example, if the business is established as a corporation, the account should actually be in the name of the corporation itself, rather than in any individual name. However, the spouse who operates the business will have signature authority over the account, though ownership of the account will be retained by the corporation.

Partnerships are another business form where joint ownership of accounts between a married couple isn’t even workable. Since a partnership can involve multiple business partners, ownership and access to any financial accounts will have to be retained within the partnership. The lone exception would be where both spouses are partners in the firm.