Separate Bank Accounts: 'Till Death (or Banking) Do We Part?
Many couples today boast separate bank accounts and successful relationships. But is it possible? Or are separate bank accounts a recipe for disaster?
In this day and age, anything goes. Common-law relationships can be accepted to be as serious as married couples, and married couples can be as independent from one another as two strangers. I have seen both first-hand.
So how do couples navigate through the sticky world of finances in this brave new world?
First of all, I can't stress enough that communication about finances is the key to a happy relationship. The number one thing couples fight about is money, and I believe many relationships can be saved (or avoided) with proper communication about finances.
It's funny - people are more comfortable sitting around the dinner table and talking about their sex lives before they're comfortable talking about money. Why is this? Is it a dirty or shameful thing? Do our personal money matters hold some secret key to our identities?
In any case, I don’t think that anybody can dispute the fact that proper communication about finances can avert some of the worst financial and emotional disasters.
It is my personal belief that separate bank accounts can be a good thing for relationships - as long as it is accompanied by proper and full communication.
Managing your own bank account (even if you are part of a "till death do us part" duo) is empowering, and a life skill that nobody should be deprived of. It brings personal accountability, budgeting, and a sense of financial pride to the owner of the account, no matter what the balance is. Even slowly digging your way out of debt is something to be proud of if you can say you did it on your own.
I once met a guy who was living with his girlfriend, and their only checking account was held jointly. He transferred a substantial sum from his savings over to their joint checking account, with the intention of withdrawing it the next day to purchase an engagement ring which he had been saving up for ages. As luck would have it, the girlfriend happened to be doing some online banking, saw the balance, and immediately applied it to some household bills without wondering where the money actually came from. Needless to say, the engagement was held off for a bit!
I actually see a few problems with this situation. Not only was it sad that the boyfriend was bamboozled out of presenting the engagement ring on the perfect occasion due to the joint account, but I am surprised that the girlfriend didn't first wonder what that money was doing in the bank account before paying bills with it. If the couple had proper financial communication, the bills would have been properly budgeted for, and extra sums of money wouldn't immediately be applied unless there was a conversation about it first.
Some would say that separate bank accounts indicate a lack of faith in the relationship. I would hope that a testament to commitment in a relationship can be deeper than names on a bank account, and in fact I have seen many a divorcing couple separate their joint bank accounts too. So joint banking is certainly not a way to cement a relationship.
Another argument for a joint account is to pay for joint assets, such as the house, bills, kids, and other miscellaneous joint items. Some couples successfully navigate this through the use of a joint account specifically designated for bills, but still maintaining separate primary accounts. Each member of the couple deposits "x" dollars each month into the joint account to cover off the bills.
This can be a very effective way to manage the finances. It still requires a certain amount of communication to budget the optimal amount of money required to cover the bills (since mum or dad doling out twenties for the kids' miscellaneous expenses can add up quickly if it isn't accounted for), and this method allows each person to have their own financial independence with their individual accounts.
It may, however, entail a few extra monthly fees to maintain a third bank account, depending on the financial institution and services used.
In any of the serious relationships I've had (which includes marriage), there has been no problem with maintaining separate bank accounts, even to cover the joint bills. Usually one person takes care of a major monthly expense (such as living expenses), and the other takes care of the rest. When one person paid more of the joint expenses than another, we simply reimburse each other for the difference. The trick is we have always been lucky enough to have sufficient financial communication and budgeting to make anything work.
And if your relationship is solid, you too can communicate your way through to a system of budgeting, accountability, and empowerment that works for everybody in the family. Even with separate bank accounts.
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