Shared Spending
ask an expert: bankingcanada
(Jul.23.10)
What should I consider before opening a joint bank account with my partner?
Julia U. emailed us at expert@sweetspot.ca, and finance expert, Gail Vaz-Oxlade answered:
Joint accounts are wonderful things for managing joint finances, but I don’t recommend that people put all their money into a joint account for a couple of reasons.
First, a joint account means both signers can do whatever they want with the money. So if you are piling up money for, say, a vacation, and your buddy decides to fly the coop with all the money, you’re left with an empty account (even if it was all your hard-earned money). Second, joint accounts being used by two people to pay for everything often means one or the other doesn’t know what’s going on, and money assigned for one purpose gets spent on something else, leaving someone hopping mad.
My recommendation is always to run joint expenses (hydro, mortgage or rent, groceries) out of a joint account, putting in only enough money (and a small float) each month to take care of the joint expenses. Then do everything else (saving, personal debt repayment, entertainment, clothes and personal care, etc.) out of individual single accounts so that you have complete control over the money. This "yours, mine and ours" approach to managing the money is the one that will let you work together, but also maintain your individual financial identities. It also lets you do with your money what you wish without having to answer to a partner who may have a very different style of spending. Even little things like being able to buy birthday presents for your buddy without him or her seeing the transaction going through the account will be easier.
If you are determined to only use a joint account, you and your partner must be meticulous about keeping track of what's being spent so you don’t both trying to spend the same money. That means making sure that every transaction is shared and someone is keeping track. That’s not all bad – you should be tracking your spending anyway – but it does mean you may have to justify every penny you spend.
Gail Vaz-Oxlade is one of Canada’s most successful and respected financial writers, and has written several bestselling books. She currently doles out her no-nonsense approach to money management as host of the television show Til Debt Do Us Part, which airs in 32 countries and reaches over one million Canadian viewers each week. You can buy her book here.
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