In the old days the men earned the money, they paid the bills and they controlled the bank account. Twenty-first century relationships are far more complex. One of those complexities is the sticky issue of joint accounts.
You've joined together for "richer or poorer", but how you handle the joint account question can have far-reaching consequences. You're moving from financially autonomous beings to one unit and there is no one-size-fits-all answer.
With couples marrying later these days it can be harder to move from financially autonomous beings to one unit and throw everything into the pot. As a result individual accounts aren't uncommon. The idea is united we stand, divided we bank. But it's not good for a couple’s long term wealth.
A better alternative is a joint account with the "it’s yours, mine, and ours" approach. This approach has real advantages. It's much easier to have one set of goals and one financial life if your money is pooled.
One alternative that works for some couples is to have a joint account you pay your salaries into and set amounts are then credited directly to individual spending accounts.
A UK survey found (and the findings would be similar here):
- One-fifth of couples still have a traditional approach to money. The man earns it and controls it.
- One-third of couples keep separate bank accounts.
Where couples keep their finances separate, women sometimes come to resent their position and that's where the fights can start. The survey found couples who keep separate accounts often harbour mutual suspicion and couples who pool all of their finances are least likely to bicker
No matter what the system you both need to be singing from the same song-sheet for family finances to work well. It's best to have the mother of all financial discussions at the outset and make sure you understand each other's money personalities, needs, and values. You might even want to order copies of each other's credit records and discuss them.
The sooner you lay your cards on the table the more likely you are to survive as a financial partnership.
- No one strategy works for every relationship.
- Accept we all have money quirks. That's what discretionary spending is for.
- Shine a light on the dark recesses of your money personalities and discuss them.
- Don't launder money and keep a hidden stash from your partner. This is a sure-fire way to destroy honesty.
Also be aware that your position on how your finances are managed might change over time or when your circumstances change such as giving up work to look after children.
The D-words also loom large in the decision. That's divorce and debt. In divorce what’s mine becomes yours. And the debt incurred during your partnership becomes both of yours on divorce or long-term relationship split, even if you have separate accounts. It’s then that some people find that their family trust can be bust open because they’ve used the joint account to pay trust expenses.
It’s essential before setting up a joint bank account to think through the what-ifs. What if your partner turns out to be a feckless spendthrift? Even worse, what if your big spending partner ruins your credit record?