One of the most popular questions I get from people is about how to arrange bank accounts for a couple. Should they be separate? Should you just have one joint account?
Rarely is there a one-size-fits-all answer for many questions about money, so I'll preface this by saying that if you have a system that works well for you, more power to you. One big joint account might be fine … for you. Completely separate bank accounts might also be fine … for you.
But, if you have never really thought about it before, then this is what I suggest for people who have made a long-term commitment to each other and don't feel like they have a handle on things: three bank accounts. One joint account for your regular household inflows and outflows, and two separate personal accounts for your "mad money."
The Joint Account
Setting up one joint account into which both your paycheques are deposited is step one. All your regular expenses like the mortgage payment, utilities, phone bills, insurance premiums, car payments and more are paid from this account. The next step is to make sure that at the end of each month there is a surplus. If not, you have to fix that before anything else.
Your monthly long-term investment or savings contributions should also come from this one joint account as well.
Separate Personal Accounts
The personal accounts are for your mad money indulgences. The point of these accounts is that you don't have to be accountable to your spouse or partner for what you spend this money on - so long as you don't go over your "allowance." As a couple, you should determine how much money gets transferred to these accounts in the first place.
Perhaps you've decided that each person gets $300 transferred monthly to the personal accounts. One person uses that $300 up each month buying fancy coffees and eating lunches out at work. The other person might not use it up and their account builds up slowly over time. They should feel free to go out and buy larger-ticket items every once in a while, like electronics gadgets or jewellery.
This three-account system is a good starting point, especially if you haven't been talking about your personal finances with your significant other before. You'll have a better handle on the household finances as you both establish the overall budget in the joint account, but you'll also make those guilty pleasures feel a lot less guilty.
Preet Banerjee