In my journeys through the Internet, particularly across social media, many of the same questions get asked again and again. What smartphone should I get? Was it really called The Berenstain Bears all this time and not The Berenstein Bears? Is a hot dog a sandwich?
Beyond the usual questions about sleeping, feeding, toddler tantrums, and the best age to have a kid, parenting groups regularly turn to the question of finance. In one dad group in particular, every few weeks, someone will inevitably ask whether it’s better to have separate or joint bank accounts. This naturally comes from the perspective of guys who are either married or in other similar long-term relationships.
Now, I should preface this by saying that I am, by no means, any sort of financial expert. Also, I can only speak to what works for us, since everybody’s situation is different. But here’s what we do.
Joint Bank Accounts for Joint Expenses (Sort of)
Both my wife and I work full-time and earn a full-time income. Well, she’s more traditionally employed, receiving a paycheck every couple of weeks from her employer the way most people do. I’m self-employed as a small business owner (freelance writer), so my income can be a little more sporadic. In any case, we both earn a living.
The situation would be decidedly different if one of us only worked part-time, or if one of us decided to become a stay-at-home parent full-time. Many families have that dynamic. And it’s not out of the ordinary, consciously or unconsciously, for the primary breadwinner to hold that position over their partner. I’m not going to get into that, as that’s a whole other can of worms and it calls for an entirely different solution.
In our case, we didn’t really start living together until we got married and bought our first home together. It wasn’t until we got the mortgage on our home that we decided to open a joint bank account; the lender required us to open an account that included all owners on title. So, that’s what we did.
Like so many other couples with joint bank accounts, we use ours to pay for common expenses. The monthly mortgage payment is pulled out of there, for instance, in addition to basic utilities, property tax, and our daughter’s RESP.
But… things aren’t exactly so cut and dry. We don’t necessarily fund the joint account equally. Or at least we don’t keep track of it. When we notice that it’s running low on funds, one or both of us transfers some money in. And not all common expenses come out of it either. She tends to pay for groceries, but I typically pay for gas for the car. It’s imperfect, but it works, because we figure it all (roughly) balances out in the end.
Separate Bank Accounts for Savings and Spending
In addition to our joint bank accounts (technically we have both a savings and a checking account together, plus the mortgage), we also have individual checking and savings accounts.
I maintain a separate U.S. dollar account, for instance, since many of my clients are based in the United States and pay in U.S. dollars. We also have separate accounts for our RRSPS and TFSAs, partly because it’s just easier to keep track of contribution limits and such. We’re “open books” with one another about this sort of thing, but we don’t exactly ask each other for regular status reports either.
Spending works in much the same way. We don’t have a shared credit card; we have our own separate credit cards and take care of our own expenses. We don’t “keep score” of who paid for dinner, parking, or even hotel rooms. Again, it all balances out in the wash. At least we think it does.
But It’s Kind of Murky
Our clearly imperfect system with its lack of checks and balances obviously isn’t for everyone. It helps tremendously that we’re both “strategically frugal” with our money, so spending never really gets out of hand. And if one of us was clearly the primary breadwinner and other was clearly the full-time homemaker, the situation would be very different as well.
The other elephant in the room is the uncertain future. No one goes into a marriage expecting it to end in separation or divorce. But the truth is that the total divorce rate in Canada is just under 40 percent (within the first 25 years of marriage). We’ve been together for almost 20 years (not married the whole time), so I’m not too worried about that.
Pragmatically speaking, the more cautious approach would be to keep everything separate as much as possible; that’s up to you and your partner to decide. For us, this jury-rigged combination of separate and joint bank accounts is doing what it needs to do. And we’re comfortable with that.
Oh, and for the record, a hot dog is definitely a sandwich.
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