Joint Bank Accounts with Your Partner: A Useful Tool or an Unnecessary Hassle?

In more senses than one, being in a relationship means there will be some give and take, especially if you decide to live together. Before moving in with your partner, you’re probably thinking about how you two will divide chores, who’s going to walk the dog every day, and which side of the bed you can claim.

However, one thing is for sure, you two are going to have to have the money talk.

What’s our budget? 

How will bills be paid? 

Should we open a joint bank account?

If you’re just married, or the relationship is trending towards long-term, considering the potential advantages and disadvantages of joining your accounts or keeping them separate is important.

Traditionally, joint bank accounts were a given for most married couples, though, prior to taking this leap, here are some things to think about before joining accounts with a spouse.

Keeping your accounts separate

Pros

• Having your own account may give you a sense of financial independence and privacy. You can easily own up to how much money goes in and out of your account, you can keep transactions private, and you don’t need to feel responsible for someone else’s funds.
• Depending on the nature of the relationship, you may want to keep your account separate for security reasons. In case things don’t work out, you may not want the other person to have access to your finances, or maybe you don’t want to go through the hassle of sorting and dividing your assets.
• If you and/or your partner is older and have already established good financial habits and credit, you may not want to risk ruining it by adding another person to your account.

Cons

• If one of you were to die, the surviving spouse wouldn’t have access to the other’s account until their estate is settled, which could unfortunately take months.

Making a joint account

Pros

• Opening a joint bank account can help you both build healthy financial habits. With another set of eyes on your expenses, you may rethink some of your more frivolous day-to-day purchases in fear of judgement.
• Sharing finances and having a joint account can also be seen as a sincere form of commitment to the other person.
• One account means less account management or annual fees, saving you money.
• In the event of death, the second account-holder will still have access to the finances.

Cons

• If one of you mismanages the finances, this could lead to tax consequences for the both of you.
• If guidelines aren’t communicated effectively before opening a joint account, your relationship could suffer in other areas. For example, if one person is contributing more to the account than the other, does this mean they’ll feel as if they won’t need to contribute as much in the household?

As an alternative, couples may want to take a hybrid approach, where they each have their own individual chequing account, in addition to a “family” account that they can rely on to take care of joint responsibilities and work towards combined financial goals. 

Creating a budget as a couple

Talking money and creating a budget with your significant other may seem like a daunting conversation, but the right approach will assure you and your spouse are on the same page. Both parties, though, need to be open and honest about their current financial situation.

Here are some steps to take towards starting your financial life together. 

Start the conversation

This may be the hardest part! Finances can be difficult to discuss as everyone is raised differently and holds money to a different regard. Depending on how your parents handled their finances, this may determine how well you were taught to handle your own. Be sure to discuss annual salaries, expenses as well as debts and assets that are being brought into the relationship—and don’t forget to lay out individual and combined financial goals.

Make a list of all combined financial responsibilities

This includes all pooled monthly expenses such as rent or mortgage payments, home or tenant’s insurance, utilities, groceries, etc.

Review your individual budget

This, on the other hand, may include things such as car payments, car insurance, and other expenses such as eating out. If you had a budget for yourself prior to living together, you may want to use that to cross reference which items are still relevant versus obsolete now. Be sure to break down your budget into necessities, wants, debt-repayment, and savings.

Create a list of short and long-term financial goals

Whether it’s purchasing your dream home, paying off a small loan, going on vacation or saving for retirement, implement a savings plans to work towards these goals early in your relationship so you two can form habits. Even if your contributions to these financial goals fluctuate over the years, keep your eyes on the prize and continue to encourage each other to save.

See how much you and your partner should be saving to achieve your financial goals with our trusty savings calculator!

Correct your budget as needed

Don’t forget to track your expenses! When you first create your budget as a couple, you may want to reassess it bi-weekly to make sure you’re both on track or until day-to-day healthy financial habits have been formed (Are you both still buying lunch every day? Are you both now putting a portion of your paycheques into a savings account regularly?)

Once you become more comfortable monitoring your finances, you should still review your budget regularly, but maybe not as often. That is, unless you’re faced with any big or unexpected financial changes (you are planning to do some renovations, or your car breaks down suddenly and you need to pay for repairs).

Every couple’s approach may be different, so do what it takes to keep the love alive and see what works best for you two!