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Some say money makes the world go around. While others say it is the root of all evil. It’s easy to see why money and money-related matters can be so confusing. Add the merging of two people with different financial philosophies to the mix, and it could become messy.
For years, studies have shown a strong correlation between a happy marriage and combined finances. Blending your finances can lead to a deeper sense of trust and transparency, and shared responsibility as you work towards financial goals as a team. However, that doesn’t mean it’s right for you.
While many couples prefer to merge their money, some prefer to have financial independence and control over the money they earn. Understanding when and why joint bank accounts can benefit a couple’s money matters is an important consideration to explore. There is no right and no wrong. You must do what feels right for you as an individual, and as a couple. By doing so, you can help build a strong financial foundation for your marriage.
The advantages of joint bank accounts
1. Transparency: A joint bank account can help boost transparency in a relationship, as well as a shared commitment towards financial goals. It can also enhance communication between the partners. A consolidated view of the family finances may lead to a shared sense of confidence and control.
2. Strengthened partnership and trust: The merging of your marital money can lead to stronger communication as it encourages couples to work towards common financial goals and purchases. As well, having full transparency over the family financial transactions can build a greater sense of trust between partners. It also has the added benefit of helping reduce financial infidelity and secret spending.
3. Simplified finances and shared expenses: With both partners contributing their earnings into the same account, it becomes easier to keep track of financial chores; reducing disagreements and confusion over funds available and bills being paid.
4. Ease of planning and budgeting: With your combined incomes in one account, establishing a budget may be easier. And with quick visibility to your family funds, establishing a plan for your financial future is a mouse-click away.
When to consider separate bank accounts
1. An imbalance in debt or credit scores: It’s rare for two people to enter into a relationship with the same approach to managing money. If one partner carries significantly more debt or has a lower credit score, it may be best to keep your finances separate for a while. That’s because some lenders may examine other parties linked to your finances. A joint bank account means both parties are equally responsible. If your partner has a lower credit score, it can negatively impact your credit score, as well.
2. Desire for financial autonomy: While joining finances can help simplify money matters, it can also remove a sense of financial independence. Before you met, you had unilateral decision rights on how to spend the money you earned. If joining your finances makes you feel you’ve lost autonomy and control over your earnings, it may be a good idea to keep your money separate until both parties feel ready.
3. Gambling or other addictions: If one party has addictive tendencies such as gambling or overspending, or even drug addiction, keeping your accounts separate may be the safest route to protect your finances.
Your decisions about your money and how you manage it can impact your relationship. When done thoughtfully, merging family finances can help simplify your finances and even possibly strengthen your marriage. Doing so requires open communication, trust and transparency. The decision to join bank accounts is a joint decision, that should meet the needs of both partners.
Not sure if a joint account is right for you? Check out our Account Selector Tool or speak with one of our advisors.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.