Source of image: Rachel Bar This is a huge question that many couples have to ask themselves all the time. Should we open joint accounts or should we keep our separate accounts? You share an address, may even share a last name, so it's only logical to want to at least consider pooling your money together. But what would that mean? Well let's consider the pros and cons of both ideas.
Having Joint Accounts OnlyIf you want complete honesty in your relationship, opening a joint account will definitely provide you with a clear idea of who your significant other really is. Each of you will know exactly how much income is going in at all times. You will also be able to track each other spending habits.
However, say the account has a $2,000 balance and you decide to go get a TV for $1,500 without talking with your partner first and then your partner's car breaks down and they are trying to pay for $600 in repairs about an hour after you purchased the new TV. Now the car repairs will not go through because the $600 will overdraw the account and cause a negative balance of $100. Your partner cannot get the car repaired. But you have a new TV.
Although it is great to have everything in one account and creates an atmosphere of transparency, you two will have to constantly communicate first prior to spending, or at least create an uncompromising budget, in order to avoid overdrawing the account and to prevent embarrassment at the register.
Keeping Separate Accounts OnlyFirst, nothing changes as far as setting up direct deposits for work. No shopping for banks to set up a joint account. Basically, everything stays the same as it did when you were single. The biggest plus is whatever is left after bills are paid is yours to do with what you like; and there are no worries about what your partner is doing with the excess money as when there is a joint account.
The setbacks are you have to blindly trust that your partner is taking care of their financial obligations and are behaving in a financially responsible way. Unless they willingly share their bank statements with you, you will have no way of seeing their actual financial activity and make sure the bills are actually being paid outside of merely trusting that it is being handled.
So although things will remain the same as far as account numbers and debit cards, you two will have to create a budget of who will pay what bills and you will have be accountable to make sure you pay what you say you will pay. There will also have to be a high degree of trust and responsibility on both of your parts to make this work.
So the verdict... Joint or Separate? It depends on who you are as an individual and more so how you work as a couple. We're not financial advisers and don't know your unique situation. We're solely talking in general manner and from life experiences.
You will have to decide for yourself what would be the pros and cons of what would happen if you two went joint account only or stayed separate accounts only. Think about how as individuals you are handling your money now. If you both are not very good with your own money now, maybe the accountability of a joint account only system might work best for you. If one of you is better than the other with handling money, once again maybe a joint account only system might be the way to go. If you both are great with your individual finances, then maybe just creating a budget and splitting the bills but keeping separate accounts might be for you two. You two can also always keep separate accounts but open a joint account where you contribute money from your separate accounts to pay the bills.
However, regardless of what you do, this is something you two would need to decide for yourself. If you two are still not sure, I highly suggest setting up a consultation with a financial adviser or financial planner (not an accountant) to help you make this decision.
