Over time in a relationship, you start sharing significant costs. Rent or a mortgage, power and gas bills, food, holidays… the list grows as your lives become more entwined.
At some point most couples will think about getting a joint bank account.
You might do it as an intentional gesture, asking your partner to get a joint account with you as a sign of commitment to each other.
It might catch you by surprise, perhaps when you’re going to the bank for a loan. For example, the bank employee asks you if you’d like to open a joint account since you’re buying a property together. You look at each other, shrug and say ‘Why not? Let’s do it.’
When kids come on the scene, a joint account may become a necessity. It can help keep the household going, removing admin tasks like shuffling money from one account to another.
For those not yet fiscally welded together and considering a joint account, keep this in mind:
Joint accounts are not compulsory.
You are no less of a couple if you don’t have a joint account.
Your commitment to each other is no less significant than those who go ‘all in’ with 100% joint everything.
Getting a joint account – and how you manage your finances as a couple in general – is up to you. As a partnership, you get to decide what works best. There are no rules.
Let’s take a look at the pros and cons of joint accounts so you can decide what suits.
Benefits of joint accounts
If you’re coupled up, having a joint account can be helpful in a few ways:
1. United we stand, divided we fall
When you put all your money together, you’re forced to get clear on what you each want and what priorities you have. You decide how that fits together to make combined goals that you both work towards.
If you haven’t had that awkward ‘So, how do you manage your money?’ talk with your partner yet, it’s an excellent milestone at which to broach the topic.
You might find you don’t have common goals and you can’t reach a middle ground that would make joint accounts work. Good news: that doesn’t mean the relationship is necessarily doomed. But you might want to think twice about going all-in together financially (more on that in the next section).
I often hear: ‘My husband manages the money, I don’t look at it.’ Or: ‘That’s the domain of the missus. I’ve got no idea how much we spend.’
Life is full. It’s no surprise that we divide and conquer when it comes to life admin tasks. In most cases, it seems easier if one person does all the thinking and managing of a specific task. That way, the other partner doesn’t have to worry about it.
That’s fine when it’s deciding who’s going to manage the laundry or the gardening. It’s a lifesaver when you decide how you’ll split the school drop-off and pick-up.
It’s risky with money.
I’m not just talking about the risk of one half doing the dirty. Siphoning off funds and flitting off with their new amour, leaving behind a bewildered and destitute other half. Though yes, that does happen.
I’m talking about the risk of abdicating financial decisions to one person.
Two things suck about this:
First, it puts all the mental burden of money management on one person. Like parenting takes two, so does something as fundamental as financing your lives. If you’ve heard of mental load, you’ll know what I’m talking about. That concept extends to money management. It’s not one person’s job in the relationship – you both share that responsibility.
Second, it’s no fun in an emergency. If you’re the one in the relationship who manages all the money and you go under a bus, what’s going to happen to your partner? Amid the stress of a major life event, they’re expected to come up to speed with your assets, debts and cash flow. It’s a recipe for breakdowns.
That said, if you’re in a happy relationship where one person is 100% in charge of the money and it’s working for you, that’s fine. Just think about how you’ll manage if that one person suddenly couldn’t do it anymore. Have a plan in place to manage that, if it happens. For example, keep a file with official documents and lists of assets/debts/cash flow sources. Better to have that plan and not need it than vice versa!
3. Reduced costs
Investing comes with transaction costs. Stamp duty on property, brokerage on shares, even annual fees for packages that get you special treatment at banks.
Even more fundamental is the cost of life in general. With two people contributing to rent or a mortgage, you can usually get a better bang for your buck than if you’re flying solo.
Being able to split those costs means you can get ahead quicker. It’s an advantage not to be taken lightly if you’re looking at tens of thousands of dollars in stamp duty!
Drawbacks of joint accounts
For every good point about joint accounts, there’s downsides too:
1. Trivial arguments with non-trivial results
Ever been on the receiving end of: ‘What’s this charge?’ in reference to your joint card? Then had to go through a lengthy discussion about what the charge is and why it’s legitimate?
Or maybe you’ve been the one looking at last month’s charges. You’re trying to piece together what your partner’s been spending money on. When they start to add up, it can be terrifying.
I’m all for having that conversation when it’s needed. For example, if one partner is frivolously spending money that you need for paying rent. The spender-or-saver tension can be tough to manage but you need to do it if it threatens your financial security.
But sometimes, it’s not productive.
If we’re talking about discretionary income particularly, do you need to know where it’s been spent?
Take my husband and I:
He likes to buy glossy magazines filled with cars and motorbike. I don’t get it – they seem like a waste to me.
I like café lunches with my friends. He can’t understand why we’d eat out – wouldn’t a coffee at home do? We’re just there to chat, why buy overpriced salads?
We both get our kicks from our respective things, and probably spend comparable amounts in a year.
I say probably, because I don’t actually know how much he spends on magazines. He doesn’t know how much I spend on lunches with friends. We spend the money for our indulgences from separate accounts.
It saves a lot of querying and debating.
Maybe a joint account for joint stuff and separate accounts for individual stuff could save you some unnecessary stress too. It might even save your marriage.
2. Fobbing off
Joint accounts are not a sure-fire way to fix the commitment problem.
You can have joint everything and still not look at the transactions list. Ever.
One partner can still fob off all the money management with impunity, leaving the other partner to do it all.
Joint accounts are a tool. It’s about how you use them.
3. No staying money
Now we get to the pointy end.
You may have heard the phrase: ‘She has some running-away money set aside’.
(It’s usually a she, because in the past it’s been about women leaving their breadwinner husbands.)
I prefer to think of it as ‘staying money’. As in: ‘I can afford to leave. I stay by choice.’
When everything is joint, you don’t have staying-money accounts.
Technically, if you have an either-to-operate joint account, you could consider anything in said joint account fair game. When it’s a low-risk separation and things are civil or even amicable, that works fine.
But one in six Australian women will experience financial abuse.
One in fourteen Australian men will too.
So, of the roughly 25 million Australians in the country right now, that’s a little under three million who will at some point be on the receiving end of behaviours like:
- Being given an allowance (that’s fine when you’re a kid. Not cool for an adult).
- Being preventing from getting or keeping a job.
- Being forced to ask for money.
- Not knowing about or having access to family income.
- Being expected to buy groceries and pay the bills with inadequate money.
Financial abuse is no joke, and often accompanies other forms of family violence.
I’d prefer to see those three million (in fact, all 25 million of us) with an account to which they are the only signatory, with a little staying money in there. This makes the option to leave an abusive situation – and to stay away – that bit more viable.
It doesn’t need to be a secret that such an account exists. You could keep your partner updated on the balance. But I think it makes sense to have some money that is just yours – just in case you need it.
How about you?
What works for your relationship?
Have you gone all-in? Kept everything separate? Found a happy middle ground between those two extremes?
We’d love to hear what you’ve settled on, and how you got there. Leave a comment below 🙂
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Lacey Filipich is the co-founder and director of Money School. She helps parents raise financially savvy kids and helps adults get on top of their finances. Connect with her on LinkedIn and follow the Money School Facebook page to learn more.
My husband and I have a joint account (mortgage offset) where the majority of both our incomes go. This is tracked in our budget app (YNAB), we are both responsible for monitoring what we spend against the budget and we reconcile the accounts each week. We also have weekly/monthly budget catch ups so that we discuss our overall savings goals, holiday targets, etc. We each have a separate account that some off-budget fun money goes. Mostly this money is for buying each other gifts – hard to hide birthday presents in the budget!