This is a subject many couples encounter as a relationship becomes serious, whether moving in together or getting married you should discuss and decide ahead of time how finances will be handled, and this includes bank accounts.
Joint or Separate Accounts?
There are pros and cons to both, all relationships start out happy and while many remain that way, others don’t and some end badly.
Reasons to Have Separate Accounts
Keeping accounts separate gives each person financial independence. You control your money, and you know exactly what comes and goes. You don’t have to ask permission to withdraw money from the account or have limits on what you can spend. You have only yourself to answer to.
If Unmarried
Unmarried couples should be cautious when opening joint accounts, there are not as many legal protections in place for unmarried couples as there are for those that are married.
Different Financial Personalities
All of us have our own way of handling finances, some people are very responsible with their money, others are not. It can cause stress and tension in a relationship if your partner has very different views on money than you do.
Protection From Creditors
If either person is having financial difficulties such as outstanding student loans, credit card debt, medical debt or other problems creditors can demand payment and target the person’s bank account. Keeping accounts separate prevents the other partner from suffering financially. Additionally, both parties would be responsible for any bank fees and any lines of credit linked to the account.
Relationships that End Badly
When you have joint bank accounts each person has full access to the money in the accounts. If the relationship ends badly either partner can drain the accounts leaving the other with nothing. No one wants to imagine this can happen, but it does.
Easier to Walk Away
If the relationship ends each partner having their own accounts saves time and possibly money. There is nothing to divide or transfer. Closing a bank account and moving money is not difficult but it takes time and effort.
Reasons to Have Joint Accounts
Shared Expenses
Couples may consider keeping their accounts separate but opening a joint account to use for paying bills and rent, buying groceries, household expenses and saving for a vacation or wedding. Both people should agree on what the account can and can’t be used for and how much each will contribute to the account.
Displays Trust & Commitment
Some couples may feel that if their accounts are separate, it displays a lack of trust and commitment, especially after marriage. If you feel your relationship would benefit from having a joint account, it may be the best option. Having a joint account can demonstrate that you trust the other person and are willing to work together to meet your financial responsibilities and goals.
Encourage Transparency
When a couple shares an account, it encourages transparency since each can see what the other is doing. This can help couples talk openly and honestly about finance and how their combined money will be budgeted. This keeps both partners accountable.
Uninterrupted Access During Times of Crisis
Unexpected health and other emergencies can happen leaving one partner unable to manage their finances. If they are unable to pay joint expenses for a period of time the other partner may be left in trouble financially. If the couple has a joint account bills and other expenses can continue to be paid uninterrupted.
If one partner were to pass away the remaining partner would have no legal standing if they held separate accounts. Any money in the account could be lost.
Before making any financial decisions in a relationship there should be a discussion on how each person manages their finances, what their financial goals are and how shared expenses will be handled. Consider meeting with a financial advisor and a couple’s counselor to openly discuss all issues related to money in the relationship so each person has a clear understanding of how it will work.
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