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Should You And Your Partner Merge Your Finances?

Some things in relationships need to be kept separate. Is your bank account one of them?

Once married or committed to your partner, the romantic notion of joining lives sometimes spills over into the decision to merge bank accounts. Some couples have a small joint account, while others will have a combination of accounts. There is no one-size-fits-all solution, but there are pointers that can help you decide if this is the route you want to take.

  1. If your relationship is deeply rooted in trust and your spending habits do not vary drastically from that of your partner, a joint bank account could be a means of strengthening your relationship, serving as a symbolic gesture, showing the union of two people into one unit.
  2. Some legal affairs are also streamlined with joint bank accounts. In the event that one spouse passes away, the other spouse will retain access to the funds in a joint account without having to refer to a will or go through the legal system to claim the money. Depending on local laws, the surviving spouse may have to endure a lengthy legal process to claim money if they had separate accounts.
  3. Married couples with joint accounts may find it easier to keep track of their finances because all expenses come out of one account. This makes it harder to miss account activity, such as withdrawals and payments.

Some people believe that maintaining separate accounts undermines the fundamental concept of marriage. If you are planning a wedding, consider opening a joint bank account for wedding expenses as a trial run. As you work toward your big wedding day goals, you’ll have the transparency that comes from having a single account and develop a stronger sense of teamwork.

Couples need to be completely honest before considering joining accounts. Financial infidelity, such as secret spending, can ruin a relationship and become dangerous if the cheater has access to all the money. Studies show that 70% of all couples have fought over money, and financial problems are twice as likely to destroy a marriage than sexual problems.

Is it worth the risk of merging your finances?

Many financial advisers suggest hybrid systems when it comes to joint expenditure. With this blended system, couples share a joint account for household finances, but each partner has a personal account to do with as they please. With this hybrid approach, the real decision is about how to divide the household income:

  1. In the scenario where you and your partner make roughly the same amount, you could contribute equally to the joint account and then keep the balance in your personal accounts.
  2. If one partner makes significantly more than the other, they could fund the joint account entirely on their own and keep the remainder in a personal account. The spouse could simply keep their own income in a personal account to spend as they wish.
  3. Some couples use a proportional system: If one partner earns two thirds of the household income, for example, they contribute two thirds of the joint account. After funding the joint account, the partners can do whatever they want with the balance.
  4. A final option is to use the “adult allowance” system. In this case, both spouses put their entire paycheck into the joint account and then withdraw a fixed amount into their personal accounts every month.

Financial experts agree that any system has the possibility of causing tension in a relationship. The key to maintaining a healthy financial relationship with your partner is much the same as a romantic one: transparency, honesty and communication.

 Image: iStock

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