How many of you grew up your whole life believing that one of the biggest signs of a mature relationship was getting a joint bank account? Maybe your friends told you that if you don’t get a joint account with your partner, it means you don’t trust them. “Marriage is supposed to be a complete blending of your lives” – no thank you.
What’s mine is not yours. I believe one of the keys to a happy relationship is having some semblance of financial independence from your partner. Don’t get me wrong, I see the benefits of joint accounts. No more keeping track of who owes whom for the groceries, no more guesswork on splitting the bills. Joint bank accounts allow you to see the bigger picture of your finances and can even help encourage your partner to have better spending habits. This is why I advocate for contributing part of your money into a joint bank account and the rest into separate bank accounts for each partner.
This solution is the best of both worlds and will allow you to reap the benefits of both options. Having separate bank accounts to store money for emergencies and prioritize our individual needs will keep us from growing codependent with our partners. Chances are you both earn different incomes, so how do you decide how much each of you should contribute? I go over how to calculate the exact amount each partner should contribute to the joint account later in this article.
Keep in mind that everyone’s financial situations are different and this article is geared towards couples where both partners are working. But, if you are a stay at home parent, you can still have an emergency fund stashed away in a personal account if you choose to. Read on to find out my tips on having financial discussions with your partner.
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How To Decide How Much To Contribute Into Your Joint Account
When my boyfriend and I first moved in together 3 years ago, we discussed having joint accounts. We both decided that we were not ready for that yet and would split the bills evenly for the time being. As the years have progressed and we began talking about marriage, we discussed what our future finances would look like. We decided that the most fair way to manage our finances would be to have our own separate bank accounts and one joint account for shared expenses and bills. By allocating the same proportion of money to the joint account, we will be splitting the bills in a fair way.
So how do you decide what your contribution will be? First, you will need to determine what your shared expenses are. What will the joint account be paying for? Once you know what to look for, you will need to do a budget audit of both of your budgets for the last 3 months (don’t forget to check your Venmo history too!). Add up all of the shared expenses and from there you will be able to decide your proportions.
Now it’s time for some math! Don’t worry, I’ll walk you through each step. Let’s run through a quick example using Ally & Steven.
Ally earns $100,000 a year as a professor and Steven makes $75,000 as an engineer. After a lengthy discussion, Ally and Steven both decide that Ally is not responsible for paying for Steven’s student loans, and Steven shouldn’t pay for Ally’s medical bills from before they were married. They are only focusing on the items that directly affect their unique living situations and the items that they share. This is a completely personal decision, and will vary for each couple.
Their monthly expenses (that affect each other) include the following:
Housing – $1200/mo
Utilities – $100/mo
Internet – $75/mo
Groceries – $500/mo
Phone bill -$200/mo
Netflix – $12.99/mo
Travel fund – $100/mo
Emergency fund – $300/mo
Total Joint Expenses: $2,487.99/ mo
Total Household Salary: $175,000
Now we will need to decide what proportion each person is responsible for. To do this, take the smaller salary and divide it by the total salary. In this case, we will divide Steven’s salary by the combined salaries.
$75,000/$175,000 * 100 = 43%
Since Steven makes 43% of the income, he is responsible for 43% of the expenses. Now how do we figure out this amount?
43% * $2,487.99 = $1,069.84
Ally is responsible for the rest of the expenses:
$2,487.99-$1,069.84 = $1,418.15
So, Ally is responsible for contributing $1,418.15/mo to their joint account while Steven contributes $1,069.84. Both of them are contributing their fair share to cover their average monthly costs! What they do with the rest of their money is completely up to them. They have their own budgetary and retirement goals, and prioritize different things.
Phew! Enough math for today!
Cons Of Only Having a Joint Bank Account
Whether you decide to forego separate bank accounts or not is a completely personal decision, but I wanted to share with everyone what is working for my boyfriend and I.
I decided a long time ago that financial independence was important to me. I feel that if I share all of my finances with my partner, I give up full control of everything I have worked hard to earn.
While there are pros of having a joint account, there are also cons of solely relying on one. Here are some of the most common ones:
- You have different spending priorities – I do not want to know how much money my boyfriend spends on video games or Burger King runs, and I’m sure he doesn’t want to know how much I spent on my skincare products last month. To me, video games are not a priority, but to him they are. They allow him to spend time with his friends and relax. Same goes for my spending habits, skincare is a priority for me.
- Having to ask for “permission” – If all of your money is pooled, it means that when you buy something for yourself that they might disagree with, you will have to run it past them. On one hand, this might help you curb your spending habits, but it will also make you feel like you do not have control over your finances.
- Assuming your partner’s debt from the past – Maybe you are like Ally and you got a full ride to a college, and maybe your partner decided to go to an out-of-state school and incur student loan debt. Why should you be responsible for paying for a personal decision they made when they were younger? If you did not make the financial decision together, you should not be responsible for paying for it. Now, don’t get me wrong, there is nothing wrong with choosing to include your partners student loans in your shared monthly expenses, but that is a personal decision that is up to the both of you.
- Harder to surprise each other– How can you buy your partner a birthday gift if they’re watching all of your spending? Having solely joint bank accounts can get difficult during the holiday season.
- Resentment – Joint bank accounts can lead to competition and resentment. Perhaps you earn a significantly smaller amount than your partner, and by seeing their income every month you might start to feel resentful or even ashamed. Having separate bank accounts will allow you to keep yourself from comparing yourself to your partner.
- Harder To Break Up – If your relationship turns sour, and all of your money is in a joint account,you risk feeling forced to stay with them, or might even have a lot of trouble accessing what is yours. I have heard of stories where partners withdrew all of the money and left people to start over.
How To Talk To Your Partner About Finances
Is your partner having trouble understanding why you want a separate bank account? Perhaps they are misreading the situation due to their beliefs and expectations of marriage. Share this article with them and help them see the logic behind it. Having one joint account and two individual bank accounts is the best of both worlds. Here are some tips on how to bring up the conversation with your partner:
- Ask yourself why – Why does this matter to you? How will it improve your life and your relationship? Be prepared to talk about this so they can see your point of view.
- Create goals you both agree on – If you both have the same goals, then it will be easier to explain how having both a joint bank account and separate bank account will help you achieve them.
- Approach it as a discussion – At the end of the day, your relationship is a partnership and you are both equals. You have to be open to seeing each other’s points of view and deciding what’s best for your relationship.
- Ask them why – Why do they disagree with this method? Do they like having someone hold them accountable on their spending habits?
- Give it a trial run – Ask them to try this method for 3 months. It will take some time to adjust to the changes so be patient.
- Give them an alternative – You can flip the scale and suggest having a larger chunk of your income go into the joint account , and take out a smaller chunk for personal miscellaneous expenses. This will give you both some privacy but gives the joint account a heavier weight. If this goes well, perhaps you can reapproach the subject in the future.
- Compromise & be patient – Relationships are all about compromise. Once you have voiced your opinion, realize that it might take some time for them to get on board. Be sure to approach the subject from a mutually beneficial angle and do not force them into a decision they’re not happy with.
