Marriage & Money: Should You and Your Partner Share a Bank Account?
When we have thoughts of love and romance, we rarely think about money. What’s romantic about joint budgeting and discussing how much debt each of you has? But, if you are married or living with a partner, money conversations are inevitable.
One of the hot topics of discussion with a new (or ongoing) partner is the decision about joint bank accounts. Should you have one or not?
TD Bank started an annual Love & Money survey in 2016. The bank surveys approximately 1500 couples each year to find out their thoughts on money. In the most recent 2017 survey, TD found 58% of couples shared at least one account, with the practice being more prevalent among older respondents. It appears more members of the younger generation are keeping finances separate. The survey also found that nearly 80% of respondents felt comfortable talking about money with their partners, which is a good sign.
Joint Accounts: the Good, the Bad, and the Ugly
There are benefits to sharing a joint account with your partner. First off, fees. Unless you bank with a fee-free institution like Tangerine or Simplii, banks accounts come with costs. You can save yourselves money by keeping only joint accounts and avoiding doubling up on how much of your money the bank gets to take.
The other main benefit is transparency. Each person can see what the other is doing, which can also help with family budgeting.
Finally, if one of you gets ill or dies, the other should still have access to the joint pool of funds.
The bad side of joint accounts is the other person always knows exactly what you spend. And, you might not want your partner to see just how much you spend on books or video games each month. Too much transparency can cause some relationship friction.
You also need to keep a closer eye on how much goes in and out of the account to ensure you don’t overspend. If you are both out shopping at the same time, you’ll each to need to stay aware of how much is left in your account. You don’t want your payment being rejected at the till because you both overspent.
The ugly part of joint accounts is what happens if your relationship breaks up. The account could be frozen while you legally untangle from each other, or one person can clean out the account early in a breakup.
Separate Accounts: Keeping a Little Bit of Mystery in a Relationship
Maintaining a separate account means you don’t have to account for every purchase with your partner. You also don’t have to worry about the other person spending too much and depleting the balance. This doesn’t mean you’ll never fight about money, but some people like to maintain a bit of privacy.
The bad is you will double up on bank fees, and it can be harder to budget if you aren’t upfront with your partner about your spending habits. Also, there are sometimes trust issues if your partner worries about how much you spend and what you buy and vice versa.
If you break up, your partner can’t clean out your account as easily as with a joint account. But, you could run into issues if your partner gets sick or dies. (Unless you have power of attorney issues already worked out, which is always a good idea!)
There isn’t one right or wrong way to jointly manage funds. You and your partner will have to decide what works best for both of you. It’s possible you go with option C, which is a combination of joint and separate accounts. Whichever option you choose, you will still have to talk about money and some friction is inevitable. As long as you have the same goals, you should be able to keep the money ship sailing.