By Yaёl Bizouati-Kennedy
But what do experts think about the practice? It depends on who you ask, and ways to handle finances vary from couple to couple, but the overarching theme is that you better have “the conversation” early on with your significant other and establish some ground rules.
How To Handle Banking Separately
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“No matter how you approach it, be sure you take the time to agree on what ‘fair share’ means in your relationship,” Hoots said, adding that it includes laying out expectations in clear terms to avoid resentment or confusion.
“It doesn’t have to be 50/50 for every couple, in every scenario. It could mean splitting the mortgage payment equally while the partner who earns 30% more directs a larger amount each month into the home remodeling fund, the vacation account, or wherever your priorities as a couple lie. Think about how you might revisit or update your joint expectations in the event one of you receives a promotion with a big raise – or if you lose your job either voluntarily or due to circumstances beyond your control,” she said.
Another aspect worth discussing is whether you’re going to have open books or privacy in your separate banking approaches.
“As long as each partner makes the agreed-upon contributions to joint expenses, does the other partner have any say in how the person spends the rest of the money in the account?” she said.
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The Importance of Being Honest
Ted Rossman, senior industry analyst, CreditCards.com, emphasized the importance of being honest and upfront about what’s going into these accounts if you’re going to choose the “yours, mine and ours” school of financial management.
Rossman added that secret accounts can undermine trust and that 40% of people who are married or living with a partner are committing some sort of “financial infidelity.” Indeed, a CreditCards.com survey showed that 40% of respondents who are in serious relationships came clean about hiding a checking, savings or credit card account from their partners. In addition, 28% said they think financial faithlessness is worse than physical cheating, according to that survey.
“It’s fine if you prefer separate accounts, but make sure this arrangement works with your overall financial goals and is acknowledged and respected. You shouldn’t just squirrel money away without your partner’s knowledge,” Rossman added.
Another crucial point to consider is that however you decide how you handle your finances, make sure your partner can access your account if you’re disabled or if you die.
“That might mean giving your partner legal power of attorney or making passwords accessible in an emergency. And of course, if you’re not legally married, make sure you name your partner as the beneficiary on your account, if you want her or him to have access to the funds if you’re not around,” MerchantMaverick.com’s Hoots added.
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Reasons To Keep Accounts Separate
According to her, couples who maintain separate accounts and also have joint accounts is “the best of both worlds.”
“They can save towards a common goal with joint accounts and pay marital bills with joint accounts, yet still have the independence and privacy that they desire with a separate account,” Radna added.
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The Dreaded D-Word
Finally, while not a fun aspect to think about when you’re starting your life with someone, in the eventuality of a divorce, money matters tend to be tricky.
Indeed, in the United States, about 50% of married couples divorce, the sixth-highest divorce rate in the world, according to World Population review, and money issues are among the top three reasons for divorces (22%), according to a U.S. Census Bureau survey.
Radna explained that in the circumstance of divorce, a separate bank account can provide the resources to live in a separate residence sooner rather than later and help pay for a divorce attorney to protect your rights.
“Even though separate accounts that were established during the marriage are still marital accounts for purposes of division of marital assets, it is permissible for that money to be used for necessities of living and attorney fees. The remaining balance would be divided between the spouses in a divorce,” she added.
