Should I Have A Joint Account If I’m Married?
Since I got married, this has been a topic that I’ve spent a great deal thinking about. Traditionally, the answer is a clear yes. Personally, I feel the answer is no.
But over time, I feel that the best answer is really a “qualified” yes. And while I can’t speak for everyone, I’d like to share why that’s the answer I came up with. Plus a link to a joint account at HSBC.
First, I believe that anything I spend my money on or place my money in is an investment (although it can be a good or bad investment). Even a savings account is an investment – except that I sacrifice greater returns in return for security and accessibility.
This means that putting all our money in one account is an investment. And being an investment, it should have an investment goal. It shouldn’t just sit there for nothing.
And if we have a common goal – like saving up for our dream home – then we should pool our funds. Possibly in an equity fund or bond fund, depending on the situation. And if it’s for our family emergency fund, then definitely it should be in a joint savings account.
But if it’s not for a common goal, then it should be in separate accounts. If I’m saving up for a new phone or some other gadget, I should put it in a different account and not mix it with other funds.
I wouldn’t want to inadvertently use our family’s fund to buy my phone; and I also would rather not have my phone budget inadvertently used for groceries.
Sure, if needed, I’d hand over the cash. But it’s one thing to talk about it and hand over the money but another thing entirely to have your hard-earned savings withdrawn and spent and know about it after the fact. Even if the money gets replaced (and it will) it’s better to avoid the hard feelings that will probably come with it.
Pro: If you are the same type of investor
And another equally good reason is that everyone feels differently about money. In our marriage, I’m a bit more knowledgeable and comfortable with investing – and more inclined to accept risk.
Take our savings for our dream home. We both agreed we need to save for it. But when it comes to growing our money, I would rather we put it in an equity fund. But my wife was unwilling to place it anywhere other than a time deposit.
Neither of us was wrong. Our savings should be safe, so it makes sense to put it in a time deposit. But at the same time having our dream home is still a few years away, and it’s not like we can just save up to buy it. I feel that we would need to really substantially grow our funds to make any kind of serious progress.
Neither approach is wrong. It just so happens that my wife is much more risk averse than I am. But since it was an important goal, and not something we can do separately, we compromised. She took charge of the house fund, and I took charge of the retirement fund. After a few months I was able to show her the earning power of an equity fund and she decided that it was a risk worth taking.
Con: Some expenses are just personal
Would you really want your spouse to know her valentine’s gift is worth 495.95? Sure, anyone can hunt down an item and see what it costs. But no one goes through the trouble of doing so (plus it’s rude).
But it’s a bit hard to avoid not knowing when all the money is from a common fund which we both can see and regularly check in order to balance the budget.
And that means there’s probably no surprise gift or surprise party either.
Con: Divide and Conquer
There are several things a couple will usually save up for: an emergency fund, a house, retirement, a baby fund (health cards do not cover everything), an education plan, and maybe even saving for family outings.
I feel that we both should make the decision on what to do with all of those savings. But it’s a better use of our time if I let my spouse take care of managing half of those funds while I manage the other half.
Of course, we should consult each other before doing anything, but otherwise it’s a bit redundant for us to watch over the same fund.
Plus, since my wife is more risk averse, it’s counter-productive to subject her to the stress of a fluctuating equity fund. On the other hand, I’d be better able to cope with the price swings. This would save her from stress, and give me peace of mind that we’re doing the best we can to grow our savings.
Ace in the hole: If you feel you should
Personal Finance is definitely a personal matter. And ultimately only the couple can decide if it makes sense to have a joint account.
But it’s important to talk about it and get each others perspective, not just assume they should because they think that’s what married people do.
For us, it made sense to pool some funds, but not others. For other couples, they might feel that having everything in a joint account will work for them. And if it turns out that both are actually more comfortable not having joint accounts, then that’s ok too.
Just like in any business or investment, it pays off if partners are on the same page.
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