A couple of years before my wife and I finally decided to get married, we made - what to us - was an even-more momentous decision: we decided to buy a house together. I’m being a bit facetious there. The discussions about both subjects went more or less hand-in-hand. But, tired of paying rent on two separate apartments – leaving each vacant half-the time – with nothing to show for it at the end of each month, we were forced to think about our future plans. Realizing that we wanted to spend our lives together, we made the decision to buy a place. And shortly after making that decision, we set up the no-fee joint banking account that both of our incomes go into and almost all of our household and other living expenses get paid out of.
So, are you ready to go all-in on a joint account, or do you think you’d rather keep your money separate? There are pros and cons to both.
Combined Is Less Complicated
Whether it’s a mortgage or a lease on an apartment, odds are both of you will have your names on some legally binding documents, so you’ve already broken the shared responsibility ice anyway. And unless you have some unusual financial arrangement, you’ll likely pool most (if not all) your resources to cover your expenses. Early on in our cohabiting relationship, my wife and I worked out a system where I became our official payer of bills. When the bills came in, I would mark the due date in my daytimer. Since we were both salaried employees at the time, with our cheques directly deposited into our joint account, it was easy to track that we had enough money on hand to pay our bills – and transfer funds from other accounts when needed. If we had kept separate accounts, it would have been a hassle moving funds back-and-forth to meet our needs.
The Case For Staying Single
A good friend of my wife’s recently revealed that, in addition to all the emotional stress that when along with splitting up with her husband – and the father of her children – was an unexpected financial burden. Since all her family’s credit cards and bank accounts were in her husband’s name, with her as a joint partner or not even named on the account, when she moved out, she lost access to all her cash and credit.
Worse still, since she’d never been the primary on even so much as a utility bill, she had virtually no credit rating. As a result, she was forced to try to start rebuilding her new life as a single parent with virtually no access to funds.
The Hybrid Approach
While the bulk of our money does go into and out of our joint account, my wife and I both maintain individual accounts. One of the few drawbacks to our no-fee account is that we don’t have access to teller services – meaning we can’t use that account to get a bank draft or foreign funds, to cite to examples we’ve faced in the past. So, when we need to we’ve transferred money into that account for those purposes. I also kept my old (no-fee) personal account that I’ve used to do everything from stowing away a portion of my income for tax time to building up a little nest egg for a surprise birthday or anniversary gift.
Also, in addition to our mortgage documents, all of our utility bills have both our names on them. (One advantage to that is that we’re both able to make account enquiries with customer service if – make that, when – there’s some sort of discrepancy with our bill.) By having both joint and personal accounts, we’ve figured out a way to have the best of both worlds: our day to day expenses are simplified and we still have some flexibility – and a track record – with our own individual accounts. While we do plan on growing old together, if for some unforeseen reason our relationship soured in the future, at least we’d recognized as credit-worthy individuals with some cash on hand to help us get by.