Money is the leading cause of tension in relationships.
Maybe a couple is struggling to pay bills. Maye one person spends more than the other. Or perhaps they just can’t decide how to manage their finances.
No matter the cause, every couple argues about money at some point or another.
One way to put an end to this fighting is to discuss your finances before they can become an issue. During this discussion, it’s important to talk about whether or not the two of you will combine your finances now or in the future.
Choosing whether or not to combine finances is a big decision, and isn’t one that should be rushed or jumped into. That’s why we’re breaking down the pros and cons of combining accounts that you need to know, as well as the steps you should take when you decide one way or another.
Keep reading to learn everything you need to know about opening a joint savings account or otherwise combining your finances as a couple.
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Not All Couples Share a Bank Account
Before you continue reading this list about what you need to know before you open a joint savings account, it’s important to understand that not all couples share their finances.
A 2016 study by TD Bank found that 76 percent of couples share at least one bank account. This means that 24 percent of customers who were surveyed do not share an account.
Whether or not you choose to open a joint savings account is a personal decision that needs to be made between you and your spouse, girlfriend, boyfriend or significant other.
We are bringing you the facts and information you need to know before you make your choice. But you shouldn’t feel pressured to combine your finances or to keep them separate if you or your significant other don’t agree with the decision.
Everyone and every couple is different. You may have debt, loans, or other financial difficulties that could make combining your finances with another person beneficial or problematic.
Or maybe you and your love just see keeping your finances separate as a way of keeping a degree of independence.
Whatever the case, you should talk with your significant other about the pros and cons of a joint savings account to decide whether its a good choice for you.
Pros of a Joint Savings Account
If you’re thinking about combining your finances with your spouse, girlfriend, boyfriend, or other significant other, there are several pros that you will enjoy.
From the ease of access to your money to shared responsibility for debt or costs, here are just a few that you need to know.
Ease of Access
Opening a joint savings account or other shared account means that you and your significant other will have equal access to your money.
This is beneficial for several reasons.
If you and your significant other go grocery shopping or pay bills alone, they won’t have to contact the other person to get their share of the money. Both people will have a debit card, checks, credit card, or other materials they will need to access the couple’s money.
Another way that shared accounts can be beneficial is if one member of the couple makes more money than the other, or if one person is a stay-at-home parent or unemployed.
Without shared accounts, if one person does not have an income coming in, or does not have a sufficient income coming in to cover their costs, they would have to go to the other person each time they needed money.
But with shared accounts, both people have access to their shared funds. This means no uncomfortable or inconvenient situations.
Another benefit of a joint savings account or other shared accounts is that both people share responsibility for what they spend.
If you or your significant other have shared or individuals loans or debt, shared accounts can help you tackle them together. This helps ensure that one person isn’t feeling overwhelmed or alone with their debt. Consolidating your debt can also make it easier to pay off faster.
If the debt was for something that affected both people, this also helps ensure that one person does not get stuck paying more than the other for it.
Shared responsibility is good for more than just paying off debt.
If you and your significant other experience financial trouble, being able to monitor your spending together can be a great way to stop overspending and start saving.
If you’re dreaming of saving up money for a new car, a vacation, or just a nice dinner, sharing your financial responsibility can be a great way to boost your chances of achieving your goals.
Streamlined Legal Affairs
When a married or dating couple is considering whether or not they should combine their finances or open a joint savings account, the last thing they are likely considering is the end of their time together.
But if one person does pass away, whether it happens suddenly or as a result of old age, there are legal affairs that will need to be tended to. Having shared financial accounts can help to streamline a few of these.
For instance, if a couple’s accounts were not shared and one person passes away, the other person would have to go through a number of legal proceedings before gaining access to the deceased accounts.
If the money in those accounts is needed to pay bills or to pay for medical costs or a funeral, this can be a serious problem.
If the couple is not married and their accounts are not shared, it can make it even harder for the surviving person to get access to the deceased accounts.
Even if the pair has spent years together or were otherwise committed to one another but not married, they may not be legally entitled to each others’ finances if one person was to pass away.
This can lead to significant financial trouble, not to mention the stress of going through legal proceedings. This is on top of the emotional stress of having lost someone close to you.
Another pro of choosing a joint savings account is an increased awareness of the other person’s spending habits.
While hovering over the purchases or other financial decisions that your significant other is making is never a good idea, having an awareness could help you spot trouble.
For instance, not paying bills despite having the money or overspending on things you don’t need when money is tight could be a symptom of depression.
Alternatively, if you and your significant other had decided to lose weight together, knowing that the other person can see where you are using your debit or credit card could be a great way to cut back on fast-food runs.
These may seem like minor pros. But when it comes to building a life together, some couples choose to combine all aspects of that life. Sharing your finances can help some couples feel closer because they are sharing responsibility and awareness.
If you and your significant other go through any financial trouble and need to take out a loan, doing so together can make the situation less daunting as well. You’ll have the knowledge that you aren’t alone, and that someone else will be there with you helping you pay it back.
Cons of a Joint Savings Account
While there are several pros of choosing a sharing a joint savings account or other shared accounts, there are also several cons. Here are just a few you need to know before you make your choice.
Potential Loss of Independence
While sharing accounts or opening a joint savings account can help couples keep each other accountable, for some people it can also feel like an invasion of privacy.
If you or your significant other feels that financial independence is important to him or her, taking it away can be stifling. It is likely to lead to resentment and can spark arguments between you overspending habits or bills.
Shared responsibility was listed earlier as a pro of sharing financial accounts. But it can also be a con.
If one person has brought debt to the relationship, combining accounts and sharing that debt can feel unfair to the other person. They may resent having to spend their own money to pay off that debt, regardless of how much they love the other person.
This is another example of why it is so important to base your financial decisions on you and your significant others’ individual preferences and situations. Only you can decide whether shared accounts are right for you.
Anytime you combine finances or open a joint savings account, the finances will eventually need to be separated again.
This could be as a result of divorce or a break-up or following the death of one member of the couple. Regardless of the cause, separating shared accounts can be messy.
If you’re going through a rough divorce, shared accounts can allow one person to take out more than their fair share of the money, leaving the other person high and dry.
Keeping separate accounts will prevent this from happening.
If you or your significant other has to file for bankruptcy, having shared accounts can make it difficult to do alone. You may even be forced to jointly file for bankruptcy. This can make it difficult to get loans later on.
If your accounts are not combined, then one person may be able to file for bankruptcy alone. The other person would then be able to request loans or keep their good credit.
If you have combined finances and face bankruptcy, there are loans available, even for those with bad credit, to help you get out of your financial bind.
What to Do If You Choose to Keep Your Accounts Separate
If you and your significant other do decide to keep your accounts separate, there are a few things you should do.
One is to add your significant other as a beneficiary to your accounts. This will allow the other person to more easily gain access to your accounts if something were to happen to you.
Of course, you can choose not to do this for your own personal reasons.
Another thing that you need to do is discuss your finances. Even if you aren’t combining your accounts, you may still be sharing bills like rent, a mortgage, car payments, or food costs.
Knowing who will pay which bills or how you plan to split them ahead of time is important. Failing to do so early in the relationship is likely to lead to arguments about financial responsibility.
What to Do If You Choose to Combine Your Accounts
If you decide to combine your accounts with your significant other or open a joint savings account, you need to do more than just visit the bank.
One important step is to sit down and have a heart-to-heart about what each person expects.
For instance, do you or your significant other want to work to save towards a financial goal? Does one person feel that spending should stop when an account dips below a certain amount? Or do one of you prefer to pay your bills early, and want to ensure that happens each month?
Talking through even seemingly insignificant expectations can help ensure that there are fewer surprises or arguments later on.
Alternatives to Sharing All Finances or None
If you and your significant other are still on the fence about whether or not to combine finances, or if you have decided not to combine, there is another alternative.
Rather than combining all of your accounts at once, you could open a single joint savings account to start.
This is a great way to test out sharing an account before going through the process of combining all of your finances. It gives you a chance to discuss your spending and savings habits and test drive each others’ financial tactics.
In addition, it’s a fun way to work towards building savings together. You could make this a general savings account for the future, or use it to save towards a specific goal, like a vacation or a home.
Whether you and your significant other have combined finances or not, if you’re facing financial hardship, it affects both of you..