A Case for Separate Bank Accounts?

money mentalist

In a TV documentary the other week, a new survey in the UK revealed that 34% of newly married couples had separate bank accounts.  Was this the secret to a long and happy marriage?

The other stats that came out of the survey; 80% of those that have been married over 30 years have joint accounts.

So what’s the secret?  Is there one?  We have covered this before, most recently in a video from our series, Couples and Money so let’s take a look at the fundamentals.

When our parents married all those years ago, it was automatic.  You changed your name and merged your finances.  Now, with the high rate of relationship breakup and individuals in relationships wanting to remain ‘independent’, a lot of couples are opting to keep their name and their finances in separate bank accounts.

There are pro’s and con’s on both sides of the argument, so let’s look at a few and this may help you decide whether or not to merge your finances.

When not to merge

  1. Don’t merge your finances until you know your partner’s full financial situation. If they come to the relationship with bad credit, or significant debt, this can affect your own and joint credit rating.  You need to know exactly what the situation is and have a plan on how to deal with it before you merge.
  2. Don’t merge your finances until you have set some boundaries around spending.  If one of you is a Spender and the other is a Saver and you merge your finances, resentment can build very quickly on both sides if you don’t have boundaries (i.e. a money plan) in place.
  3. Don’t merge your finances until you have had the money conversation.  We all have financial baggage.  Whether it comes from our parents, or past relationships, until you and your partner have worked through this, you may choose to not merge your finances completely. This process can take several years to work through.
  4. Definitely do not merge your finances if you partner has addictive behaviour.  This could be shopping, alcohol or other type of addiction.  A relationship like this needs serious counselling to work through the addiction issues before you even contemplate sharing a bank account or credit card.

When do you merge your finances?

The easiest place to start is with a partial merge.  Once you have moved beyond the dating stage, and are contemplating setting up a home together.  Talk about money, and decide how you are going to pay the household bills.  The most common option at this stage is each of you contribute to a ‘bills’ account, and pay household running costs from there.  A bit like having a flat (apartment) account.  The rest of your income is your own, and you pay all of your own lifestyle expenses and debt.

You can contribute 50/50 to this account.  Or if there is a significant income difference you may choose to contribute based on your income.

Many couples will stay in this partial merge for several years and that is fine, you do whatever works for you.

separate bank accounts

When you are starting to think about major financial decisions like buying a home together and starting a family, you should have worked through the money behaviours.  You will know which of you is the spender or saver.  What each other’s financial situation and earnings are, and you will be setting joint financial goals.  Now is the time to start merging fully and use the power of combined thinking to achieve your goals.

It is, however, very important, and more so for women (according to Olivia Mellan, an expert on money and relationships) that you have some separate money.

The cynical say, women need to have separate money to protect themselves should the relationship fail.

Olivia Mellan on the other hand says it is important for women to have separate money to give them their own sense of identity.

Whatever the reason, both of you need to have ‘play money’ of your own that you can do what you like with.  How much that is will depend on your own circumstances.  What you include will depend on how you define ‘play money’.

The key message is, don’t feel you have to combine your finances as soon as you have enter into a long term relationship.  There are stepping stones along the way.

Just because you are getting married doesn’t mean you have to give up your own bank account straight away.

The other stats that came out of the survey; 80% of those that have been married over 30 years have joint accounts.

Whether you do or don’t have separate bank accounts, the real trap for couples and their money is the secret money that one or both have stashed away and the other doesn’t know about.  That is financial infidelity.

If you find that the stress of money is keeping you awake at night, talk to us, email us, or click this link and book a time to have a chat – it’s on us.

So, fix your money and your whole life will change.

Take our FREE Money Personality quiz to kick off your journey to financial freedom!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s