Tuesday, 5 July 2016

Combining Finances

If you’ve been in a committed relationship for long enough (married or not) you’ve almost certainly considered combining (how's that for alliteration) your finances. I’ve been with the bf for over 10 years now and we’ve never taken the jump to a joint account and there’s not really a good reason why not. Obviously we’ve been together for a long time and have a lot of joint expenses so what’s stopping us from just combining everything 100%. Our mortgage is in both our names but other than that we split most of the bills and keep bank accounts, investments and credit cards separate. I think for us it’s just been easier to keep things status quo and we’ve never wanted to spend the time to get set-up with new accounts and change over all our automated payments but there’s also a part of me that kind of likes being able to spend my money on what I want, no questions asked (the bf is pretty easy going but there may be a slight Sephora addiction I’d be answering for…)

Obviously there’s good and bad when it comes to combining your finances so we’re going to talk a little about that today and you can see where you stand.

The Good
-Simplicity: This has got to be the biggie! One account where all your paycheques go into and all your bills come out of, no transferring money back and forth between accounts to make sure everything is as even as possible.
-Cheaper: If you’re not using no-fee bank accounts (you should be, I’ve talked more about that here) you could potentially cut your fees in half by sharing accounts and there’s a chance that combining your assets could get you a better interest rate on your savings.
-Improved communication over your finances and budget. 

The Bad
-If you’re incomes aren’t in the same range the higher earner may feel like they are taking on more of the burden for paying bills and the lower earner might feel guilty spending money they didn’t bring in. I am certainly not above this, we’ve been back and forth enough that I think we’re on even terms but there for sure have been times I’ve been the money maker and have felt a little cranky when the bf buys something I don’t consider necessary. It’s really hard to set-aside your feelings when it comes to money, hence why it’s one of the biggest stressers in relationships.
-Balancing the chequebook can be more of a challenge when you’re tracking two people’s spending
-Less privacy: Sure we should feel like we can be open with our partners but sometimes you don’t want them knowing where every penny goes and it can make surprise gift-giving a challenge. Although, this might help you better stick to your budget to avoid scrutiny.
-When finances are managed jointly there’s usually one person who takes the lead and if something happens to that person the other half could be stuck trying to figure things out at an already tough time. If you do go joint make sure both of you check-in and are in the loop. Another thing is to make sure you are both listed on any bills you pay (utilities, cable, etc.), the last thing you want is for a company to refuse you information if your spouse passed away. 

The Ugly
-Credit impact: if one of the joint account holders gets into credit trouble this can impact both people as 50% of the assets in a joint account may be seized to cover outstanding bills. 
-If the relationship ends one person could potentially clean out all the assets in the account, leaving you without access to funds and with a potential court battle.

One thing to know about setting up a joint account is that you have a couple of options available to you in regards to how the money will be treated after death. The first way is to choose ‘Joint Tenancy with Rights of Survivorship’. This basically means that if one of the account holders dies all assets in the account will be passed directly to the other holder and you can skip having the assets go through their estate. The other choice is ‘Tenancy in Common’. This means that each person owns a specific portion of the account so if there is a death you would only get your portion and the deceased's portion would go through their estate. Either way works but it is something to think about if you’re taking the plunge towards joint finances.


How do you guys feel about combining finances; do you prefer to keep things separate or like the simplicity of a joint account? 

3 comments:

  1. My husband and I are joint on everything except credit cards. The biggest challenge we have is surprising each other with gifts. It's hard when both your pay cheques go into the same account. It works for us because we are both finance people and are in the loop with our finances (more me than him though), but you make a good point, if your relationships is where one person manages the finances and the other one does not, things can go south when something happens to the 'nerd' in the relationship.
    It's been quite the journey for us in the area of joint accounts, been together 9years, married for 3 and during the 3 years that's when we joined accounts. Great post.

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    1. Sounds like it's working for you guys and that's what matters! I get you on the gifting, becomes hard enough to come up with surprises after being together for so long.

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