Your Financial Relationships: Should We Have Separate Bank Accounts?

This post is part of our Your Financial Relationships series. This series is designed to help you discover the financial topics you should discuss with your significant other in order to have a financially healthy relationship. Today, we’ll be taking a look at whether you should have separate bank accounts?

Why Ask?

A key component of any committed relationship is making sure both parties are on the same page with respect to personal finances. Although it is better to ask this question earlier in the relationship, it is never too late to have this all important conversation. Keep in mind that money or the lack of money is quite often blamed for marital stress, relationships falling apart and worse.

A Can of Worms

You see, part of the issue here is that even bringing up this topic opens up the proverbial “can of worms.” Here’s why: neither partner walks into the relationship with an empty slate. Each partner shows up with his or her baggage. If not discussed out in the open, this baggage could lead to stress in the relationship.

Consider that each partner comes into the relationship with different beliefs about money. These beliefs encompass a fairly wide spectrum. For example, what does money mean? Is money good? Is money the “root of all evil” (biblical misquote by the way) or is money in fact neutral? How should be money be used? What does it mean to have money and what does it mean not to have money? In extreme cases, there are even those with cultural or ingrained beliefs about how money is all about control. As you can see, you had best have a chat with your partner to find out.

3 Common Approaches

Now that you have done the hard work of beginning this discussion, where are you going to take it? Understand there are many different opinions about joint accounts versus separate accounts. As the saying goes, ask two different financial “eggspurts” about combined accounts, and you will likely end up with three different answers (LOL). All that aside, there are three options you will want to consider.

One Pot Fits All

There are some who argue that it is in the best long-term interests of the relationship to throw all of the combined funds into a single account. The proponents of the single pot system suggest that those who prefer separate accounts are more “selfish.” Instead of working for the team or the relationship, individuals with separate accounts end up putting their own preferences first.

These proponents go on to suggest that the very act of combining the funds is in itself a demonstration of trust and working together for a single end goal. This trust continues to build as the partnership takes the time to work on personal financial issues together and even compromising on some parts if necessary. Furthermore, the proponents of the single pot theory like to point out that joint accounts are just about required when the kids arrive.

Two Pots Better Than One?

On the other side of this issue are the dual pot proponents. The argument goes something like this: having separate accounts brings more harmony into the relationship. That is, since there is a his account and a her account, each is free to spend or save as they so desire. The two pot proponents like to say this allows the savers and the spenders to enjoy a partnership without attempting in vain to fix the other partner.

Hybrid Model

As you might expect there is the combined approach. In other words, each partner maintains their own separate accounts along with a combined joint account. The combined account is used for regular household expenses such as the mortgage, car payments and the like. The separate accounts are used however the partner wants without feeling the need to ask the other partner.

As you can see, the conversation about combined or separate accounts is one of the most important discussions you can have with your partner. Each of you needs to discuss your beliefs about money that you are bringing in as well as the expectations going forward. Only then can the two of you come up with a plan that works for the both of you.

What about You?

Do you and your significant other have separate accounts or a joint one?

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