“Love conquers all things except poverty and toothache.” – Mae West
Before I got married, I got asked a lot of questions by a number of people about everything from relocating to money. I thought that this would change after the wedding but no, that did not happen. One of the top questions which I still get asked is whether or not my spouse and I merged our finances in a joint account. First of all, I have never talked about merging finances in a joint account with my spouse so I don’t understand where this question usually comes from but I have digressed. Back to the topic of this post.
I grew up in a family where my parents maintained their individual accounts and I know how impactful this was for our eventual financial situation as one person could manage the family’s financial issues when the other was unable to. When I got older and began to focus on school and developing a career for myself, money was tight and I had to learn how to manage my finances quickly.
Although we usually have conversations on a wide range of topics, including money, we have never talked about merging finances or accounts. I know that this works for a lot of people but we do not think that it will work for us so we haven’t tried it. There are a lot of big issues which should be discussed in relationships just like having children or building a house, but the decision about merging finances should not be forced. As our generation realises the importance of money management and personal finance, it is becoming increasingly important for partners to have open and honest conversations about the pros and cons of having a joint account in their situations.
If you think that you (and your partner) are ready to take that huge step and merge your finances in part or in full, here a few things for you both to consider:
Your spending habits
Your money habits can make or break the success of owning a joint account. If you are a big spender while your partner is a saver or investor, it is important for you two to discuss these money habits, how they can impact your financial goals and money habits which need to change before you can merge finances and create a joint account.
Your opinions about sticking to a budget
Owning and operating a joint account requires a high level of planning and discipline from you and your partner. If one of you has less discipline about sticking to their personal budgets (or has never had a budget), it might be wise to start with baby steps. Try sticking to personal budgets for an agreed period before you graduate to the level of getting a joint account and joint budget.
Your knowledge of the other’s income
As basic as this sounds, if you do not know how much your partner makes, you have no business entering into a joint account situation with them. Conversations about finances are part of the ‘getting to know each other’ topics and you cant skip this only to jump into creating a joint account.
Your reasons for getting a joint account
Getting a joint account is not a reasonable ‘next step’ in a relationship or something that must be done because your parents did it. There has to be a reason for this. Discussing the reasons why you want to combine finances may not change your decision but it can ease the process.
Your agreements for how the joint account will be used
Agreeing with your partner about the project(s) for which the money in your joint account will be used will not only help you two to create a budget, but also calculate how much each person will contribute to the account. This will help to curb the urge to misuse the money and ensure fairness to each person.
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Your agreements about strictly using a joint account or also operating separate accounts along with a joint account
If you both decide to open a joint account after your discussions, you will also need to agree on whether to only use a joint account or to maintain separate accounts and only deposit a fraction of your income into your joint account. If you choose the first option, it will make sense to partially merge your finances first. This way, you both can maintain some degree of financial independence while working towards jumping all in to using only a joint account.
Despite all of these, remember that everyone’s relationships are different so what works for one couple may not work for the other. Make peace with this and make sure to be open and honest with your partner on the issue of finances.
The content provided in this article is provided for information purposes only and is not to be a substitute for professional financial or relationship advice and consultation as I am not engaged in the provision or rendering of financial advice or services. You understand and agree that I will not be liable for any claim, loss, or damage arising out of the use of, or reliance upon any content or information in the article.
