For some couples, the decision to share financial responsibilities seems like a natural next step. Living together and sharing expenses all make a claim for blending bank accounts, but navigating the world of blended finances can be tricky, so Loop21 sat down with a financial advisor from Wells Fargo to get the inside scoop on financial decisions that will keep your relationship from going bankrupt.
Loop21: What is your take on relationships and blending finances?
Finacial Advisor: In my opinion it’s a great option for people in committed relationships. When people share a life together they tend to share expenses, and blending finances can make things that much easier.
Loop21: What’s the biggest misconception people have when it comes to blending their finances?
FA: Most people don’t realize that there can be a middle ground; you don’t necessarily have to dive “all in.” For example, opening a joint bank account can seem scary, and I can understand that, but it doesn’t have to be. People who are dating and sharing expenses can, and should, keep their own separate accounts. Having a joint bank account doesn’t necessarily mean you need to join your individual incomes and savings.
Loop21: What should you do before deciding to open a joint bank account?
FA: Have a conversation together to iron out any specifics, like what the account will be used for, if you want to establish a joint savings account, too…things like that. I also think you need to assess your partner: if he’s trustworthy, responsible, etc. Not every relationship is made for blended finances.
Loop21: Any joint bank account “horror stories” you can share?
FA: The good news is that aside from the funds you share in a joint account, there is no risk when it comes to your own personal accounts. But after hearing of situations where one partner wipes the account out and splits, you can see why we recommend keeping the bulk of your finances separate. In most cases you can make free transfers into your joint account to cover your shared bills and nothing more, which in turn minimizes risk.
Loop21: What are the financial benefits of having a joint account?
FA: In addition to convenience and ease, I would say continuing a relationship with your bank and opening additional accounts can only help you down the road. The time may come when you might be interested in purchasing a home or taking out a loan, and continued interaction and loyalty to your bank of choice is both important and smart.
Loop21: Any final words of advice for couples who are thinking about blending bank accounts?
FA: It’s important to decide who’ll play what role. Who will keep track of your statements? Who will monitor for overdrafts? The effort should never become one-sided. It’s great to be in a relationship and to experience joint effort, but you should avoid just letting one partner take the reigns. Play an active part. Actually that’s my financial advice for couples, individuals, and all of the different groups in between.