Unlike couples of the Baby Boomer generation, where sharing a bank account was nothing out of the ordinary, young couples today have quite different financial needs and attitudes toward their accounts. According to a poll conducted by RBC in Canada near the end of 2009, only 10 percent of Gen X/Gen Y couples between 18 and 35 hold all of their financial accounts and products jointly. Is this the right way to approach couples’ finances?
Joint or Sole Accounts?
Author Sylvia Lim, in her book Personal Budgeting Kit, says there are few things to take into consideration, not only when making the decision to either consolidate bank accounts or keep them separate, but also no matter how you and your partner decide to handle your finances moving forward.
First, make sure that you are honest with your partner about your current and past financial experiences. Too often, differences in how couples handle their money result in a rocky relationship. Being upfront about your habits and previous mistakes will take the edge off, maintain trust, and establish open communication about money. Lim states that, “before you can draw up an effective budget, you must become aware of your spending habits,” and that by becoming aware of your spending habits, you can share these with one another so you both know how you handle money.
Another thing to think about is the importance of establishing the role of each person in financial matters. Doing this will help to reduce chances of debt, or at least help to pay off what debt you have effectively. For example, if you live together, how are the bills to be paid and should there be one person held responsible for this duty? If there are no specific roles assigned, then it is crucial to communicate frequently as to how these payments are to be made in order to avoid any disagreement when the time comes to handle these matters.
Finally, it is important to frequently communicate and review transactions that are made. Lim suggests that this be done daily, weekly, monthly, and yearly. Doing this together eliminates any grey areas when it comes to where certain money is going and to what. This reduces the element of surprise and confusion, which is less than desirable in situations involving money. Reviewing your transactions and analyzing how you handle your money will help you to “plan more efficiently to meet the financial goals that you have set for yourself.”
Once you and your partner have spoken honestly about your financial pasts, established roles for financial matters, and developed a way to continually communicate about finances, you should be on your way to being able to focus on other important things, such as starting a family, or just moving forward in a healthy relationship.
For more about finances and personal budgeting, see the second edition of Personal Budgeting Kit by Sylvia Lim.
You can find it in our Web store where you can preview the initial chapters and read see the complete table of contents.