Financial matters can get complicated and messy. Partners should decide as early as possible how they are going to handle their finances. No two couples are identical in their attitudes to spending which means that no single solution is guaranteed to work for all.
Couples can choose to open up a joint checking account online from which they both can draw, or they may choose to have separate accounts as a means of maintaining their independence; some couples opt for a combination of the two. It is important for couples to decide which solution works for them as poor handling of finances is among the more common sources of friction in relationships.
Pros of Having Separate Checking Accounts
Some people see separate accounts as a sign that the partners are not fully committed to their relationship. This is not the case; in fact, separating finances can help a relationship by eliminating all of the problems that come with joint accounts. The benefits of separating finances include:
- Shared Burden
With a joint checking account, one person is usually in charge of managing finances. This includes making sure that shared bills are paid on time and tracking all expenses. With two accounts, this work is split between the partners.
Spending habits are kept private. Some people are uncomfortable sharing their spending habits with their significant other. Separating accounts keeps them from having to justify spending money in a joint account.
Separate accounts provide financial security as one partner’s spending does not directly affect the other. This is especially important when partners have dramatically different attitudes to the handling of money.
- No Loss of Independence
The loss of independence that comes with a joint account may make some people uncomfortable. While married couples will have to share some expenses, separate accounts can make the transition from single life to married life easier.
- No Shared Debt
Separate accounts make sense when one partner enters the relationship with significant debts or poor credit. A partner can protect their credit as well as their funds by keeping their money in a separate account. Protecting credit is important for borrowing money such as via a home equity line of credit.
- Less Drama
Keeping finances separate can eliminate many of the money-related issues that can plague a relationship. Joint accounts can lead to conflict regarding how to save and how comingled finances are used. Some couples find that keeping things separate prevents disputes.
Cons of Having Separate Checking Accounts
- Lack of Convenience
A shared expense like payments for a home equity line of credit can be a hassle with separate accounts.
- They do Not Require Communication About Finances
Whereas joint accounts require partners to communicate about money, separate accounts may mean that money matters do not get discussed regularly. Without communication, a couple may have an incorrect view of their financial situation.
- Makes Financial Collaboration Difficult
The work of managing finances is doubled and collaborating to buy a home, vehicle or other expensive item becomes a far more complicated proposition.
Flexibility is essential as no particular method is guaranteed to work; if a method does not work, the couple should be willing to try something else. The key is to find the solution that works for their particular relationship. Just because joint accounts are traditional does not mean that finances have to be handled that way. What is important is that whichever method a couple chooses, they should make sure to communicate and be honest with each other.