Money Matters: Joint Account Vs Separate Finances
It’s that age-old debate: do you pool your finances with your other half or opt for individual accounts? We explore the pros and cons of each in our latest ‘Money Matters’ article. Read on to make the best choice for you – and your partner.
Joint Account: Pros and Cons
Thinking of setting up an account in both your name and your partner’s?
Dedicated research revealed doing just that could well be the key to harmony in a relationship, while others – maybe even you and your own spouse – might not be so sure about that. Let’s take a closer look…
Pros
It Could Make Managing Your Family Finances Easier
Whether you’re a family of just two or you have a house filled with children and/or pets, you might find that pooling your finances makes managing your money much easier.
If both partners’ wages are deposited into the account, it could be a more straightforward way of sharing funds and managing living costs.
For instance, you can both see, at a glance, what’s entering or leaving your account, and you can ensure financial admin is much easier as a result.
It Might Prevent Rows
Joint accounts can be a great idea if you find yourself falling out about money regularly. For example, does this sound familiar: ‘Well, I paid for last week’s takeaway so it’s your turn now.”? Or even: “I went to the supermarket four times last month and you only bought one bag of shopping.”
Can you see how things could get a bit out of hand, when it comes to managing who’s spending what? If all your funds are sitting in one account, it doesn’t matter who spent what – and when. What’s yours is theirs and vice versa.
Cons
Credit Ratings Become Linked
Does one of you have a less than perfect credit history? If so, it could make you reconsider opening a joint account. The reason being: you will be ‘co-scored’ with a joint account, as credit ratings will become linked.
Privacy Goes Out of the Window
Fancy a cheeky pitstop for a fancy meal with friends on the way home from work? Or maybe you’ve got your eye on some designer shoes. Privacy, with regards to your spending at least, will now go out of the window.
You might need to keep your finances on the downlow for a reason that solely benefits your partner, too. For example, what if you want to buy your other half a birthday gift? It’ll be more difficult to make that online purchase, given that they can see your transactions in your shared banking app. Groan!
You’re Both Responsible for Going Overdrawn
It goes without saying really, but if your account goes overdrawn, you’ll now both be responsible for the amount you owe. This can be both stressful and embarrassing – but more than that, you could be responsible for paying your other half’s debts. A sure-fire way to introduce resentment to your relationship, perhaps?
Separate Finances: Pros and Cons
Moving in with your partner and considering keeping your finances separate? Let’s take a look at why this might work out – and why it might not.
Pros
It Promotes Financial Independence
Having your own bank account – in a marriage or partnership – can give you a sense of financial independence. It can also boost your self-identity and make you feel empowered.
If you want to treat yourself and can afford to, it could seem much more straightforward if your funds are ‘your own’.
That said, when those in a healthy, loving relationship are open and honest about their finances– and budget accordingly – it should rarely be an issue to allow yourselves a treat.
If you or someone else suspects that you are experiencing financial abuse, however, – whether you have your own account or share one with your partner – talk to someone you trust. Martin Lewis has also prepared a helpful guide with some signs to look out for.
You Can Spend According to How You Feel
Just got a job promotion? The urge to treat yourself may well be strong. Or maybe you’re just in a great mood today and fancy a splurge.
When you’re in complete control of your own finances, you can spend according to your temperament – providing you can still pay your share of the bills and mortgage on time.
Tying in with the idea of financial freedom, spending money according to how you feel could be one reason to forgo opening a joint account.
Cons
Your Other Half Might Be Better at Budgeting
No good at budgeting? Many people aren’t. That’s when having separate accounts might not be the best option. Particularly if your spouse is a whizz with a spreadsheet and/or knows how to make their money go further.
Joint bank accounts could well be the way forward in this scenario, meaning it could be well worth signing up for one.
It Could Lead to Insecurity
Does your husband or wife earn more than you? Or perhaps you’re rolling in money and your boyfriend or girlfriend is scratching by.
It can be difficult regardless of the financial camp you’re in – and having less (or more) money than your loved one could lead to some insecurity within the relationship.
Ultimately, choosing to set up an account together or keep your funds separate has to be a joint decision. Communicate with your spouse openly and honestly and, irrespective of what you decide, you’ll be giving your financial set-up the best chance of success.
Keen to chat to the Unity Mutual team about our financial products, from the Lifetime ISA account to our Investment Bond? Get in touch and we’d be happy to answer any of your questions.
Until next time…
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