3 questions about joint bank accounts

Finances are a common discussion point in any relationship. When you get married, suddenly your spending habits become of interest to your spouse and your financial futures are intertwined. Some couples choose to handle expenses separately while others choose to combine accounts and live financially joint. There are many arguments to suggest one way is better than the other and ultimately it is up to the couple to determine the right financial path to best accommodate their own situation.

Often when couples are dating while cohabitating, they keep their finances separate. For example, a typically financial arrangement is to split household expenses while paying for one’s own cell phone and credit card bills. This is a common practice and can be very effective in certain situations. It ensures that each person is responsible for their own spending habits and their own debt repayment. Some people choose to carry this practice on after marriage, while others prefer to fully join their financial accounts just as they have joined their lives.

Here are some discussion points to get the conversation going.

Are You Financially Equal?

 If both parties make similar amounts of money and contribute equally to the household, then it can be argued that joint bank accounts aren’t necessary. Each person is financially independent and neither party suffers as a result because income is rather equal and expenses can be split.

Are You Equal in Debt?

 If one party has significant debt such as student loans or a mortgage while the other has remained debt free, this can cause some friction in the household. If one party’s disposable income is tied up with debt repayment, then the couple’s extracurricular activities can expect to take a back seat unless the other party decides to pay for both. Handling one-sided debt is a tricky financial hurdle to pass as a couple.

Age and Health – Life Expectancy

 Your life expectancy may not seem like a relevant topic when it comes to joint bank accounts, but it is absolutely something to be considered. When one party to a joint bank account passes away, the account automatically becomes the sole property of those surviving on the joint account. When you pass away while holding a privately owned bank account where the bulk of your liquid assets are held, there may be the need to present a probated will in order to access the funds. The probate process can take months, whereas access to funds can be an imminent concern. Joint bank accounts can be an especially important thing to have in the event of an untimely death.

There are many additional factors to consider before choosing to combine bank assets such as spending habits of your spouse. Are they a frivolous spender and you are more frugal? Are you ready to have full financial transparency with your spouse? A financial advisor at The Beacon Group of Assante Financial Management Ltd. can help you decide if it’s time to combine your bank accounts and navigate other financial planning concerns.