A relationship isn’t just about romance, and a family isn’t just about shared dinners. Living as a couple or a family is like running a business, and as with any business, budgeting and financial management are essential. One of the first and most important questions to ask is whether it’s better to manage a single joint account for both partners or to maintain separate accounts.
The answer to this question is complex, as financial dynamics between partners vary from couple to couple. Like everything in life, each option comes with its own advantages and disadvantages. There’s no one-size-fits-all model, and your choice largely depends on each partner’s perspective on money. Before making a decision, it’s important to thoroughly understand all the options, be aware of the differences in your financial views, discuss them openly, and try to identify potential points of friction or disagreement in advance.
Here are some options for managing bank accounts within a partnership or family:
- Maintaining a separate bank account for each partner.
- Maintaining a joint bank account for both partners, centralizing the financial management of the entire household.
- Maintaining a joint bank account alongside separate personal accounts.
Before making a decision, it’s a good idea to sit down together over a cup of coffee and discuss any disagreements about how to manage your bank accounts. Once you’ve made your decision, it’s important to follow a few essential guidelines:
- Separate bank accounts for each partner
Managing separate bank accounts allows each partner to maintain their independence and privacy while also giving each person tighter control over their income and expenses.
If you choose to keep your financial matters completely separate, even temporarily, make sure to act wisely, manage your personal account responsibly, and track your income and expenses:
- Plan ahead and maintain open, regular communication about the balance of your accounts. Discuss expected incomes and expenses, and what they are for.
- Decide in advance how to divide payments and bills – who pays for what and from which account.
- Consider your partner when making expenditures from your account. While the account is private, it’s important for both partners to contribute to paying the bills as a cornerstone of a healthy relationship.
- Joint account
A joint account makes it much easier to manage financial matters and allows both partners to have equal and full control over the money. It creates complete transparency in financial management, gives both partners access to the account’s status, and also saves on management fees for holding an additional account.
Even here, it’s important to maintain wise management, primarily based on aligning expectations. It’s highly recommended to decide in advance how you will address any issues that may arise around the topic:
- Ensure your spending habits are similar to avoid getting into arguments.
- Agree on in advance what each person’s contribution to the account will be: will it be equal, or will each partner contribute based on their ability and earning capacity?
- Define who manages what in the account and remain aware of its activity. In a joint account, both partners share equal responsibility for the account’s status.
- Decide what spending amount will require a joint decision.
- Discuss any changes in your financial situation and make appropriate, shared decisions.
- Discuss your financial situation regularly and openly.
- At the beginning of your journey together and unsure if full sharing us right for you?
Opening a joint account is indeed a significant step. You can begin with small steps:
- Open a joint account that doesn’t allow overdrafts.
- Agree in advance on the amount each partner will deposit into the account.
- Decide which expenses the account will cover.
- After a defined period, review whether the account is being managed according to expectations and justifies extending the sharing.
Note! Opening a joint account when one partner has a problematic credit history might transfer those issues to the shared account. For example, the bank may limit the credit available for the joint account.
- Keeping separate bank accounts while opening a joint account
The joint account is intended for shared expenses, while the individual accounts remain for personal expenditures, ensuring each partner’s privacy.
For this approach to succeed, you need to decide:
- Which bills and payments will be handled through the joint account.
- What each partner’s contribution to the account will be: Will it be equal, or will each contribute according to their income and earning capacity?
So, what to decide?
No matter what you decide regarding the management of your financial system, as long as the decision is made thoughtfully, with clear expectations, communication, and the definition of goals and boundaries, you are guaranteed that you’re on the right path.
Constantly learning
Couple life evolves and changes over the years, and with it, so do the commitments and priorities that affect how you behave as a couple and as a family. In order for financial management to remain relevant and up-to-date, it must also be invested in, just like the other aspects of your relationship.
The Paamonim organization offers courses for young couples, helping you prepare a budget, create stable financial foundations, and prevent future financial crises.
The article is part of a joint initiative by Poalim and Pamonim for financial guidance and economic rehabilitation of young families.
