For most of couples, marriage means sharing responsibilities until last breath and hence they combine their finances too, but over the years the outlook toward marriage among people has changed, especially when it comes to finances, since they have understood that marriage can turn out to be hell at any point of life. Many couples combine their finances to show a gesture of financial union, but it does not work for all couples. Millennialls, according to a survey, are least likely to be in favour of having a joint bank account.
Whether you should have a joint account or a separate account totally depends on understanding between you and your partner. Before you make a decision, you should know about financial habits of your partner. Even though you trust each other blindly, there is no guarantee that your relationship will stand the test of time. This blog discusses the pros and cons of both options.
A joint bank account
If you are fully confident about financial behaviour of your partner, having a joint bank account is not a problem. One of the biggest advantages is it simplifies things. Whole of the money is in one account and hence there is no fight over trivial matters. Whether you or your partner pays for, you know that you are on the same page. This idea works among those couples who have built strong faith and understanding and they value their relationship more than money.
Another advantage is it is easier to get a loan approved. Suppose you need to take out a loan to buy a tumble dryer, it can be a bit difficult to have a loan approved if you do not have enough income, but the likelihood of approval can go up if you have a joint account. Whether you take out online loans in Ireland or a mortgage, the approval rate is likely to be higher because it ensures your repayment capacity.
Merging finances also brings some drawbacks:
- Your money can start going toward debt after combining finances.
- You may have more fights with your partner over money.
- You will be almost broke when your relationship comes to an end.
A separate bank account
Time has changed; gone are the days when a woman used to be financially dependent on their husband’s income. People do not favour the concept of joint account nowadays because they are being practical toward their relationship. The concept of joint account is also famous among those couples where only one person is the breadwinner, or where one earns the significant amount of money and the other earns little money.
The best thing of having separate accounts is you are fully responsible of your spending habits. Since there is no interference of your partner in your financial life, the likelihood of disagreement is very least. When you keep your money separate, it is truly yours even after the end of your relationship. It gives a sense of equality. What you earn is yours.
Yet, there are a few cons of having a separate bank account
- You are wrong if you think it totally eliminates arguments over money. If you love to save and your partner loves to spend, it can be very annoying at a certain point of time.
- You will have to make efforts to pay equal amount for household bills.
- You cannot show your partner’s income along with yours to have loan approved.
- There is always room for financial infidelity.
Which option should you prefer?
Each option has pros and cons. The rule of thumb says that you do not need to dump whole of your money into account, neither need you to share each penny. You should have one joint account for your regular expenses so that there is no fight for equal contribution, a joint savings account and separate bank accounts. This will help you and your partner to be on the track.
The bottom line
No matter which method you use to manage your finances, it is paramount that you always communicate everything about finances with your partner. Discuss finances with your partner before you get hitched. If you have explained your financial situation early, it will be easy to work out a plan to manage finances. If you have any financial problem, you should immediately discuss it. It can prevent you from falling into debt. be open and honest throughout each phase of your relationship. Make sure that you are on the same page when it comes to finances.
