Money Talk With Nimi: Should Couples Have Joint Accounts?

Tunde grimaced as the cashier handed him back the debit card. “I am sorry Sir, but your card has been declined for insufficient funds”. Since he got married to Temi, this had become a problem. Temi was not as responsible with money as he would have liked and could be quite frivolous and impulsive about spending. Whatever money was deposited in the joint account through direct debits from their two salary accounts simply evaporated into thin air. Fortunately, Tunde always kept some cash on him so he was able to pay for the groceries.

Tough economic times can strain not only a couple’s finances, but their relationship as well; where one partner is less “responsible” with money, their spouse may feel some resentment. Financial concerns are one of the most common sources of tension in a relationship. Fortunately, planning and communication can help you avoid financial friction and frustrating conversations.

Most people have already established their own financial personality and preferences even before they become part of a couple. For new couples, it pays to start off on the right footing by establishing a fair and open method for dealing with finances; money matters should be discussed and opinions expressed early.

Here are some thoughts regarding joint and separate accounts.

Joint Accounts
Joint accounts are most common amongst married couples. There are also other instances where it may be prudent to operate a joint account. For example, an elderly parent may consider opening a joint account with their adult children in order to pay household bills or to avoid the probate court process in the event of their death. A parent may also opt to maintain a joint account with their child in order that they have access to funds should the need arise.

In any partnership, there will be shared expenses which, regardless of who actually pays for them, the benefit is shared. These include food, utility bills, and the larger expenses that may be too large for one spouse to handle alone, such as rent or mortgage payments, school fees, and family vacations. It is important that there is complete clarity and communication regarding such expenses. If one person earns significantly more or less than the other, it would be fair to contribute amounts in proportion to the respective incomes to reflect this imbalance.

Joint accounts work best where both parties have established a solid level of trust between them. Whilst this offers convenience and transparency, it does mean that each spouse becomes financially liable for the other, and of course either party can go to the bank and drain the account.

Separate Accounts
Do separate accounts ensure that there are no fights over money? “Perhaps we would fight even more if our money was merged,” says one-half of a couple that prefers to remain anonymous. If one person spends money in a way that the other considers frivolous, or you find a joint account restrictive as it affords you less privacy and independence, it is probably best to have separate accounts. Being able to spend money without having your partner scrutinize the minutest detail is certainly important to some.

Even though there may be no need to question each others personal expenses such as clothing, personal luxuries and hobbies, it is advisable that both parties should still be involved and consulted in relation to the significant financial decisions. There must be a conscious effort to keep the greater financial picture in mind as with separate finances one may lose sight of the family’s long term goals.

Joint and Separate Accounts
Having a joint account for certain large and recurring expenses combined with individual accounts for personal expenses is a good compromise. Particular expenses may be assigned where one person will pay for certain bills whilst their partner pays for others. This is probably the most popular system where each partner takes some responsibility in maintaining the household budget yet each still retains some independence.

As the global economic crunch continues to bite, families across the nation are affected, with many experiencing financial concerns for the first time in their relationship. Today, most households require two incomes in order to sustain their standard of living and lifestyle and to build a secure financial future for the family.

There is no one size fits all; some couples have joint accounts whilst others prefer to keep their finances separate. Even the best system is not always appropriate all the time so plan to modify your system as your relationship and financial situation evolves. If one system doesn’t work, just try a different one. Regardless of which option you choose, it is important to discuss money matters.

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Nimi Akinkugbe has extensive experience in private banking and wealth management. She is passionate about encouraging financial independence and offers frank, practical insights to create a greater awareness and understanding of personal finance and wealth management issues. She is married with 3 children.Find out more via www.nimiakinkugbe.com