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When it comes to marriage or a long-term domestic partnership, the whole “What’s mine is yours” idea isn’t always the wisest way to approach your finances.That doesn’t mean there isn’t a way to make joint bank accounts work, but Dr. Taffy Wagner, CEO of Money Talk Matters, cautions partners against ditching their financial independence altogether.
“Couples are all in love and want everything to be joint,” Wagner says. “But when they automatically put all of their money in one account and one person is managing it, a lot of the time the other person has no idea what is going on.”
That’s no way to start the beginning of your lives together, so we asked a few experts for tips every couple should consider before merging their finances.
Sharing is caring. One way to treat a joint bank account is like a mutual money pot for household bills and other expenses, such as groceries and vacations. Financial planner Casey Weade said he and his wife maintain joint savings accounts for big budget goals like vacations, which they both contribute to equally each month. (See 8 tips for drafting a budget.)
Don’t ditch your own piggy bank. “Each person should have an individual account that they can use to
pamper each other or themselves without it affecting the household bills,” Wagner says. “The key to their individual accounts is both would have access to each other’s account if needed so there are no secrets.”
Pick your joint bank together. Whether you’re opting for a low-fee credit union or big bank with major rewards card offerings, you should decide together which bank will carry your joint account. Feel free to keep your independent accounts wherever they are, Wagner says.
Make a pact to communicate. You have to agree before you even open your joint account to communicate openly and jointly manage the account. Otherwise, one spouse could be left high and dry. “If the husband is the one who is managing the money and something happens to him, then the wife is literally lost and has no idea where to start,” Wagner says. (Don’t forget to plan for disasters.)
Treat it like a business relationship. Per family law attorney Steve Mindell, take the emotions out of setting up joint finances by pretending you’re in a business deal. “Everyone has to be on equal footing if you’re gonna merge those two ‘companies,'” he says. “You have to have some kind of an agreement (on how the account will be used).”
Decide who will control the plastic. Unless you have two separate debit cards for your joint account, which is possible, you might want to select one person to hold on to it. Also, if you’re using the account to pay bills, you’ll need to split them or decide which spouse is responsible enough to pay them on time. “And include the other person about what is happening with the finances on a regular basis, whether it’s bi-weekly or monthly,” Wagner adds.
Keep things organised. If one partner is in charge of paying the bills, maybe the other can be held responsible for keeping track of receipts from other purchases, Wagner suggests. “This way there are no surprises at the end of the month or whenever the bank statements are reconciled.”
Don’t turn a blind eye. Whether one person is holding the purse strings on your joint account or both, you’ve got to keep a close eye on the account together. You’ll notice right away if one spouse overspends at the grocery store or maybe uses the card on a purchase you never agreed on together, Wagner says.
Start off on the right foot. See 14 money lies that’ll wreck your marriage >