Emma Brekjak and her husband Matthew, here at home in Toronto, think that two separate bank accounts is better than one.Thomas Bollmann
Emma Brejak and her husband Matthew share a home, a car, two children and a future. But thereʼs one thing they don’t share: their bank accounts.
“We’ve always kept our finances separate,” says Ms. Brejak, a 37-year-old massage therapist in Toronto. “We’re both the types of people who don’t want to merge our entire lives with the other person.”
Many couples these days are opting for separate bank accounts, and those who do combine their dollars are waiting longer than ever to open up that first joint account, says Liz Schieck, a financial planner with the New School of Finance in Toronto. According to a Bank of America report released this year, more than a quarter of millennials keep their finances separate from their spouse, while only 13 per cent of baby boomers do the same.
There are many reasons couples keep their bank accounts separate, Ms. Schieck says. For one thing, people typically move in together long before getting married – sometimes never formally tying the knot – and often pay bills separately, as roommates might.
“It’s not like 25 years ago, when you got married before you moved in together,” Ms. Schieck says.
Other times, couples will keep their finances separate if there’s a large imbalance, such as when one person has a student loan, or someone has assets and an income significantly higher than the other person.
Some couples want to get their careers off the ground and be able to fend for themselves, before teaming up, Ms. Schieck says. In other cases, that financial self-sufficiency is already established before the relationship began, and the couple see no reason to fix something that isn’t broken.
A mixed approach
Sara Zollo, a Richmond Hill, Ont.-based Sun Life Financial advisor, says there’s a benefit to having some financial autonomy.
“It allows people to maintain their independence, and a certain amount of privacy,” she says.
Still, there are some financial benefits to teaming up. It’s easier to manage the money needed to pay bills, whittle down debt or sock into savings.
“Not having a joint account can lead to a less-efficient use of overall net monthly income,” she says.
Ms. Schiek recommends that her clients have a joint account that each person pays into to cover shared expenses, such as the mortgage or rent, utilities, groceries and child care. Each person can still keep some money for themselves in their own accounts.
“Then it doesn’t become: ‘Why are you buying these video games?’ ’Why are you spending money on shoes?ʼ It’s more, ‘We’re tackling these shared goals. Go nuts with what’s left,’” she says.
At the very least, Ms. Zollo counsels clients to set up one joint account, just in case one person falls ill, gets into an accident or loses their job and they need to make some quick changes to the way they run their finances.
Ins and outs of separate accounts
Having separate accounts, or one joint account for bills and shared expenses, means youʼll have to figure out who is paying what, which can often lead to friction, especially if one person makes significantly more than the other, Ms. Schiek says.
“If expenses are split evenly between both partners, the one with the lower income will have a hard time saving money, or even making ends meet.”
In these cases, she usually recommends her clients divide up household expenses proportionately, rather than straight down the middle.
In Ms. Brejak’s home, her income fluctuates, while her husband’s is fixed. He takes care of the mortgage, internet and anything else that’s paid on a monthly basis, while she covers the more variable costs, such as groceries and kids’ activities.
The big picture
Whether or not your bank accounts have both your names on them, it’s important to sit down every once in a while and look at your overall financial picture.
“You need to look at it holistically,” Ms. Schieck says. “What are you doing with those accounts? Is there a logic to it over all or not?”
Just because you have separate accounts now doesn’t mean you always need to keep them that way. Some couples find keeping separate accounts too cumbersome once they buy a house or have children together, Ms. Schieck says.
Other times, a change in employment can drive the switch. Heather Campbell and her husband kept their finances separate until just this year. But with her husband working half-time come the fall, so he can spend more time taking care of their two young kids, their ‘his and hers’ system didn’t make sense any more.
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