Marriage is the union of two souls…but does it have to be the union of two accounts? For some couples it makes financial sense to combine their money. Think: when stashing away for a dream home, or vacation. For others, it could be the road to frequent domestic disputes. Putting every last dollar towards your spouse’s $10,000 golf membership? Not so much.
How do you decide what’s right for you? Here are some preliminary considerations before going forth and merging:
· Marrying a spendaholic? Overdrafts on your joint account made by a financially irresponsible partner could automatically lower your credit score, without you even swiping your card. Combining accounts (this is not the same as becoming a supplementary card holder) means knowing both parties will impact each other’s capacity to borrow for a mortgage, business loan, etc. By the way, nearly 60 percent of Americans have never reviewed their credit score. Check out both your reports before signing up.
· What’s your communication style? Have you always discussed big-ticket purchases? Don’t roll your eyes – many couples steer clear of these topics. I’ve had friends who hid $5,000 bags (plural) from their husbands. If you’ve avoided talking money and budgets throughout your entire relationship, a joint account is probably not for you. On the other hand, if you usually plan large buys together, this could work out well.
· Can you delegate? It’s essential to decide who will make what financial spending decisions, before signing up for a joint account. Plan who’s in charge of which bill payments made from the account. Talk through what expenditure will be made by who – this avoids doubling up efforts. Getting into a routine also negates chances of late bill payments. If the joint account will be used for investing, decide beforehand how investment decisions will be made. Who will be making them and how much will you be investing per month? Nifty points to note: women make 85 percent of a household’s purchasing decisions. Also, men are likely to save three times more of their income than women.
· Get help for budgeting together. Whether you decide to visit a financial adviser or turn online for help, creating a plan and financial goals will help you identify the type of account best for you. It will also make money conversations easier when discussing sensitive topics like one person’s super-enthusiastic spending or cutting back on vacations. Maintaining a “pool” for household expenditures and bill payments could be your joint account. For any other expenses, separate accounts may be simpler.
Marriage is (mostly) about caring and sharing, but it’s definitely worth mulling over whether joining accounts will work for you.
What say you, Saver? Think joint accounts are a good idea? If so, what are your tips to make it work?