How Many People Have Joint Finances?
According to YouGov, just over half of married and cohabiting couples have joint finances. While this is convenient and allows for greater financial transparency, it also comes with a few risks.
These include issues like lack of autonomy, shared responsibility and problems that can arise if a relationship ends. Keeping your joint finances in check can help you avoid these issues.
1. They’re more communal
There’s a lot of research to suggest that people in couples tend to pool their finances together. In fact, it’s estimated that about 80 percent of couples have joint bank accounts. But this may not be the best solution for everyone.
The key to a successful financial relationship is communication. This means making sure that both parties agree to the broad terms of the account, like how it’ll be used and who’s responsible for paying which expenses. You also might want to set up a schedule for reviewing shared finances to help head off misunderstandings before they get out of hand.
For some people, a joint account can make it easier to budget and track spending. That’s because you and your partner will be able to see how much money you’re spending on a variety of expenses, from groceries to rent to Netflix subscriptions. This transparency can help you keep your eye on your goals and ensure that you’re avoiding any unnecessary purchases.
However, there are some situations where separate accounts might be better for your situation. For instance, if you or your partner have a lot of debts that need to be paid off, a joint account might not be a good choice. That’s because you would be on the hook for any debts that your partner incurs in the future.
Ultimately, if you and your partner have different financial habits and beliefs about what constitutes good money management, joint accounts might not be the best option for you. That’s because you could end up with low-balance penalties, overdraft fees and other charges that eat away at your bank account balance. It’s best to speak with a financial expert before making any decisions about your finances, so you can determine what’s right for you.
2. They’re more independent
It’s not uncommon for couples to have separate bank accounts, but it’s also true that more people than ever before keep at least some of their finances in joint accounts. That’s partly due to the fact that in many relationships, one person is the income-earner, so it’s often a natural instinct to use their partner’s money for things like household expenses and vacations.
However, if you want to avoid arguments over finances in your relationship, it’s better to keep your money separate — at least for a while. You’ll likely be happier in a relationship when you have complete autonomy over your financial matters, and having separate bank accounts will help you to achieve that.
When it comes to your finances, it’s important to be honest with your partner about what you can afford and what you’re not able to. This will make it easier to budget together and avoid financial disagreements.
You’ll also need to decide how much you want to contribute to shared household expenses, such as rent or mortgage payments and utilities. If you decide to share those costs with your partner, you should both open a joint account and deposit the amount you agree on for these expenses each month.
In addition, you’ll need to discuss how you plan on dividing your savings between the two of you. This will help you avoid financial arguments and ensure you have enough for your goals, such as buying a home, having children or purchasing a car. And, it will also help you to understand how your spending patterns will affect the amount of money that your partner has access to. If you’re unsure how to approach your finances as a couple, it’s best to talk it over with a professional financial adviser.
3. They’re easier to manage
Whether you and your partner have just started a new relationship or you’re celebrating a big anniversary, it’s important to understand how your finances work together. Money experts agree that joint bank accounts are a good way to help couples manage their money, and they offer a number of benefits.
1. Make it easier to budget as a couple
Most people will need to budget for spending, so it’s easier to track when you have joint bank accounts. It also makes it easier to see where your money is going and where you can cut back.
2. Keep track of all expenses – including those that are shared between the two of you (rent, food, etc.)
It’s important to keep track of all your expenses so that you can avoid falling into debt. The best way to do this is by keeping a written record of everything you spend in a month, whether it’s on groceries, clothes, or bills.
3. Have more money dates – and less fights about finances
When you have joint bank accounts, it’s easier to have money dates where you review your income and expenditures for the previous month. This helps spot overspending before it becomes a problem, and it can save you time when you review your monthly budget.
4. Set joint-goals for savings and debt repayments
It can be difficult to save for major purchases or emergencies when you have individual bank accounts. However, when you have joint bank accounts, it’s easy to share the responsibility for saving towards goals like a house or a vacation.
5. Protect account holders in the event of death – and enjoy survivorship rights
When you have a joint bank account, you can set up survivor benefits to ensure that your account remains open to the remaining spouse in the event of your death. This can protect your assets and provide access to funds in the event of emergency, especially if one of you is disabled or has recently been hospitalized.
It’s also a good idea to discuss any pending financial obligations with your partner, such as student loans. They can be a drain on your family’s finances, and it’s important to talk about them before you decide to put them on a joint budget.
4. They’re easier to empty in a divorce
Most couples have at least one joint bank account, and handling these accounts should be at the top of your divorce to-do list. Once you’ve identified which of your accounts are joint, take the steps to dissolve them as soon as possible.
As you may know, when a couple is divorcing, the process can be complicated. Between state laws, beneficiaries and dividing assets, disentangling finances can be an incredibly stressful and time-consuming task.
Having your finances handled properly in your separation can also help you recover your assets and get a fair division of marital property after the divorce is finalized. For starters, your spouse cannot empty a shared bank account without consent from both of you. This can leave you vulnerable to theft and other financial harm.
While you should never completely drain a joint bank account, taking out a portion for a specific purpose, such as to pay for a particular expense, can help the divorce process go more smoothly. The court may be more willing to grant this type of relief if you can demonstrate that it’s necessary for you to survive in the current circumstances.
However, if you do decide to empty your shared bank account, make sure that it isn’t done with the sole intention of hurting your ex-spouse or in defiance of a court order. This type of action will be viewed very negatively by the court and can have serious consequences in the future.
To avoid this, Guffey recommends that couples keep their finances separate until they have a solid separation plan in place. This could include dividing assets and debts, figuring out who will pay what bills, and making a plan for the financial well-being of your children.
Keeping your finances separate can also be a good idea if one partner has significant debt or an inheritance. These types of assets are often considered separate property in a divorce, and your former spouse will need to be responsible for repaying them.
Many people choose to keep their finances separate after marriage to give themselves more financial independence. This is particularly helpful if you have goals with big price tags, such as buying a home or having children. Having the money set aside for these expenses makes it easier to gauge your progress toward these goals and ensure that you stay on track financially.
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