Financial parity: separate bank accounts or joint bank account?

Relationships aren’t just romances, and family isn’t just shared dinners. Living as a couple or family is a business in every respect, and as with any business there is a need forbudget building and financial management. One of the first and most important questions to ask is whether it is better to manage one joint account for both spouses or whether it is actually worthwhile to manage separate accounts.

The answer to this question is complex, since financial relationships between spouses differ from couple to couple, and as with everything in life, here too there are advantages and disadvantages to each of the options chosen. There is no one-size-fits-all model and your choice depends, to a large extent, on each of you’s perceptions of money. Before you decide, it is worthwhile and important to familiarize yourself with all the options, be aware of the different perceptions between you, talk about them and try to identify points in advance that may create friction or disagreement between you.

Here are some of the options for managing bank accounts in your marital or family system:

1. Maintaining a separate bank account for each spouse.
2. Joint bank account management for the couple – an account that coordinates the financial conduct of the entire family unit.
3. Managing a joint bank account as well as a separate bank account.

Before making a decision, it is recommended to sit down together over a cup of coffee and find out if there are disagreements between you regarding how to manage your bank account. Once you’ve made up your mind, it’s important to follow a few rules:

1. Separate bank accounts for each spouse

Maintaining separate bank accounts allows maintaining the independence and privacy of each spouse and also allows tighter control of each spouse’s income and expenses.

You have chosen to keep your financial affairs completely separate, even if temporarily – make sure to act wisely, manage your personal account correctly and track your income and expenses:

• Be sure to plan ahead and have a regular, open dialogue about the status of your accounts. What are the expected income and expenses and for what.
• Decide in advance how to divide the payments and bills between you, who pays for what and from which account.
• Consider your spouse before you take money out of your account. Although the account is private, it is important for each party to participate in paying the bills as the key to a good relationship.

2. Joint account

A joint account greatly facilitates the management of financial affairs and allows the couple full and equal control over money. It creates full transparency of the financial conduct and makes the account status accessible to both spouses and also saves management fees for maintaining an additional account.

Here, too, it is important to maintain wise conduct based mainly on coordination of expectations. It’s also a good idea to decide in advance how to solve problems that arise around the issue:

• Make sure your spending habits are similar so you don’t get dragged into arguments.
• Determine in advance what each person’s contribution to the account will be: will it be the same or will everyone contribute his share according to his ability and earning capacity?
• Define who manages what in your account and stay on top of what’s happening with it. In a joint account, you both bear equal responsibility for the state of the account.
• Decide what amount of expenditure requires a joint decision.
• Talk about any changes in your financial situation and make appropriate and joint decisions.
• Discuss your financial situation regularly and openly.

3. Are you just starting out together and still not sure that a full partnership is right for you?

Opening a joint account is indeed a significant step. You can start with small steps:

• Open a joint account that doesn’t allow overdrafts.
• Agree in advance how much income each spouse must deposit into the account.
• Determine what expenses your account is for.
• Check after a set period of time that your account is running to your satisfaction in a way that justifies expanding sharing.

Attention! Opening a joint account when one spouse has a problematic credit ‘history’ may ‘drag’ these problems into the joint account. For example, the bank may limit the amount of credit it provides in the joint account.

4. Maintaining separate bank accounts and opening a joint bank account

The joint bank account is intended to pay the joint expenses, while the private bank accounts are intended to pay for private expenses while ensuring the privacy of the couple.

In order for this move to succeed, you must decide:

• What bills and payments will be paid from the joint account.
• What will be everyone’s contribution to the account: will it be the same or will everyone contribute his share according to his ability and earning capacity?

So what do you decide?

No matter what you decide about how to manage your financial system, as long as the decision is made by you after thought, coordination of expectations, sharing and setting goals and red lines, you are guaranteed to be on the right path.

Constantly learning

The couple’s life develops and changes over the years and with it the commitments and priorities that influence the way you behave as a couple and as a family. In order for economic conduct to be adjusted and updated in it as well, it is necessary to invest, just like in other aspects of the relationship.
Paamonim offers courses for young couples, which will help you prepare a budget, create stable economic foundations and prevent future economic crises.