Budgeting

When it comes to finances, you’re better off using your head rather than your heart. Here are the pros and cons of sharing your accounts as well as your life with that special someone.

For separate accounts

In control

You may be a perfect match when it comes to hobbies, humour and temperament. You could even agree on how many kids you want and that the Lord of the Rings trilogy delivered the best movies ever. But nothing riles a person more than not feeling in control of their own finances. Keeping separate accounts – savings and credit – could save your relationship by allowing both parties the independence you need.

Tax-effective

Keeping investments in one name – the name of the partner earning less – is a tax-effective strategy. Similarly, putting tax-deductible borrowings (such as investment property loans) in the name of the higher earning individual is a way to minimise the tax burden on your household.

Girl power

It’s particularly important for women to be aware of their financial situation, as they typically retire with less than half the amount in the bank than men. The average retirement payout for women is $73,000, next to $155,000 for men, according to a Finsia report released late 2010. If it takes separate accounts to reinforce the importance of thinking about your future, then it’s well worth it.

Breakdown

If your relationship breaks down, having separate accounts will – at the very least – make the transition to single life a little easier. Administratively, you won’t need to close some accounts and open others – and you won’t need to worry about one person executing a savings raid. 

Surprise!

Presents! Now we’re really getting down to brass tacks. Nothing takes the shine off a gift of jewellery or a swanky weekend away like seeing the bill attached to your special surprise roll into the account the following month. And it would be enough to positively ruin Christmas. Keep that in mind before you merge all your accounts.

Against separate accounts

Harmony

While it may spark some arguments, an upfront conversation about your spending habits could lead to joint responsibility for your finances. Research suggests that financial discord accounts for about 40 to 60 per cent of splits. While some things are outside your control, setting the rules and shared goals early – and working within them together – could be the ticket to marital harmony.

Unity

If you are in a committed relationship, and especially if you have kids, you probably need to manage a consolidated household budget – it may be difficult to achieve joint goals when you have separate finances. Inevitably, at the end of the month when it comes time to reconcile your spending, one party will come to the table with a sheepish look on their face.

Fair shares

Having one single account into which you both contribute and from which you pay joint bills, such as groceries or utilities, avoids disagreements stemming from one person feeling aggrieved they are paying for more than their fair share of household expenses.

Save on fees

Maintaining two accounts can mean paying two sets of fees. This may not be much for deposit accounts, but could be a significant figure if each of you hold gold credit cards, for example. The fewer accounts, the less paperwork you receive in the mail – good for the environment and your relationship!

Long arm of the law

You might think that keeping your finances separate will give you some protection should the unthinkable happen and your relationship break down. Not so. Even if there are only single names on every account and asset, the law will see it differently and apply its own test (even for de facto relationships) to determine who owns what.

Si view: We hate to take the middle path, but successful relationships do involve compromise. Maintaining some accounts in common – it could be a mortgage or credit cards – while maintaining separate ‘spending’ accounts may well be the best of both worlds.

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