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Should you have joint or separate bank accounts?
Money And Relationships

Should you have joint or separate bank accounts?

In this series, we explore money and relationships. This week Megan explores aspects of joining finances.

It is quite likely that your parents share a bank account, after all, this is the traditional financial symbol of a union. Once mom and dad were married, they combined their earnings, savings, and debts into a joint account. In modern times, this is still widely the case, but joint bank accounts may be falling out of favor with today's couples.

There are certainly advantages and disadvantages to sharing a bank account with your partner. Yet, they may hinge on your personalities, financial state, and commitment to the relationship. There are also comprises and ways to meet halfway when deciding whether or not to share an account.

Discussing the joining of your finances is essential to any long-term relationship. Before making a choice, you and your partner should carefully weigh all of the pros and cons.

Discussing the joining of your finances is essential to any long-term relationship. Before making a choice, you and your partner should carefully weigh all of the pros and cons.

Initially, you may be thinking that the whole joint account thing is very archaic and outdated. Especially if you operate under the notion that one person will control the finances and dole out an allowance for the other. Fortunately, this is not the case with most couples sharing an account.

Advantages to sharing finances

There are definitely advantages to sharing finances. Here are a few.

Convenience. Streamline paying bills, don’t worry about dividing up grocery expenditures, and easily contribute to savings. When both individual's incomes go directly into the same account it can be much simpler to pay for shared expenses and allocate money towards savings goals. Usually, both owners on a joint account will have a debit card. This means that you should have access to funds whenever you need it.

Simplify budgeting. Two people in a relationship and living in the same household share plenty of expenses. When an account is shared it can be easier to track your spending habits and in turn create or adjust a monthly budget. Instead of tallying up receipts for groceries or recalling how much each person spent on eating out, everything will be documented in the shared account.

Never miss a payment. Like budgeting, having line items in only one account will make it less likely for a bill or payment to be overlooked. Recurring withdrawals can even be set up for the joint account and money won’t ever have to be transferred from one member of the couple to the other.

Just in case. Finally, if something unfortunate were to occur, like your other half passing away, you would retain access to your shared financials. With separate accounts, the surviving spouse will almost assuredly have to go through many hoops and loads of paperwork to claim money that was kept in a separate account.

Drawbacks to having a joint account

Sadly, sharing an account isn’t all sunshine and rainbows. There are drawbacks to having a joint bank account. Most of them have to do with feeling of a loss of independence or stem from a lack of communication. I mean, if someone is tirelessly paying down the mortgage while the other is buying a Venti Frappuccino every day, there can be some discord.

So long spending freedom. The switch to a shared account can be challenging. No longer can you ask “can I afford these new Nike’s” but now it should be “can we afford these?”. Your partner's finances are directly influenced by your spending habits. Any expenses will be withdrawn from shared funds; funds that your partner may have had a different plan for.

Communication is key. Problems usually arise when the couple isn’t talking about money. If one person brings a lot of debt, it is only fair to discuss how that will be fairly handled. Additionally, when someone earns more than the other (which is fairly common) both individuals will need to talk about how expenses, loans, and income will be managed. Talking about money can be difficult and awkward but a shared account makes it absolutely vital.

A divorce or break-up. Having a shared account can make the end of a relationship that much more unpleasant. It can be hard to separate funds and decide who gets what. Unfortunately, that is if you even get to have that conversation. Usually, with a shared account, one person can withdraw all funds without the approval of the other.  
As you can see, there are certainly pros and cons to having a joint bank account. In certain cases, a joint account probably should not even be considered. Such as if your partner has poor spending habits related to gambling or brings an egregious amount of debt to the relationship. However, in other cases, a couple may be better off with a separate account even without those factors being present.

A compromise is a joint account for shared expenses and financial goals, and separate accounts for spending that each receives a monthly allowance. This supports an element of freedom while remaining fair.

Regardless of your decision to share or not to share, laying a strong financial foundation is important. This only happens through communication. The lines of communication must remain constantly open to make sure bills are being paid and savings goals are building, whether your accounts are joined or separate.

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