Posted by Lisa | Filed under Lisa
To combine or not to combine – that is the question. Combining, consolidating or separate accounts – it’s a question that keeps coming up in the lives of friends and colleagues. When my husband and I officially moved in together 12 years ago, we were really poor students who relied heavily on OSAP and a couple of part time jobs to get to the end of the month. If I remember correctly, collectively we made about $1000 a month. The only way to make that work for us was to consolidate our finances. We opened a joint account and have never looked back. When we started out life together we were in our early 20’s and we had nothing, so there was nothing to lose. I sometimes wonder if there would be less ‘issues’ around money if we each had our own accounts. There is and has always been a large disparity between out incomes and I wonder if ‘fairness’ and resentment over perceived or actual lack of fairness would have a negative effect on our relationship. Our money, all of it, is as much his as it is mine, regardless of who made what. I like the sense of unity that gives us.
The more I talk to people the more I realize that our situation may not be as typical as I thought it was. I’ve begun to realize, through talking with family, friends and co-workers that there are as many ways as there are couples to divide expenses. Some keep their finances completely separate, each being financially responsible for a certain portion of the operating expenses of the house, while keeping complete ownership of the remainder. Other couples deposit their portion of the household budget into a joint account and then take care of personal expenses like a car payment and insurance from their individual accounts. I get the motivation to adopt one of the strategies if you are going into a relationship with assets, large savings accounts or if you and your partner have very different money philosophies and behaviours. The right or wrong approach lies with the two people in the relationship.
Here are some questions you can ask yourself and your partner if you currently find yourself at this crossroads:
- Do you view your money as yours as individual or yours in a collective sense?
- Do you and your partner have similar spending styles and long term goals?
- Have you made a plan to deal with how new expenses will be dealt with – i.e. who is responsible for the new dog, paying for daycare and saving for RESP when junior comes along?
- How will you compromise if one of you feels that something is vitally important and the other doesn’t? – i.e. what if one of you saves a healthy emergency fund but it’s the other partner that suffers a job loss – are you ok forking over that cash or will you be resentful of your partner for having to pay their mistakes
- How will you decide who is responsible for what – especially if there is a large disparity in incomes?
- Are the safeguards in place to ensure that you are working towards a common retirement goal?
- How will you deal with unexpected expenses?
The only right answer is that works for both of the people in the relationship. There are a ton of questions to be asking one another and it is a discussion worth having.