Finance for Humans
How to Open a Joint Account Without All the Resentment (or Bankruptcy)
We’re in favor of couples joining their finances, when the time is right. But we’re also in favor of doing it the right way.
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At almost every stage of commitment, there’s a traditional step you can take. There’s the step when you declare yourselves exclusive. When you make it Facebook official. When you share an address or possibly even a last name. And if you’re really an extreme committer, you can join Netflix accounts so there’s no longer a distinction between your preference for “The Purge Seven: This Time We Cut Everyone’s Face Off” and his preference for “The Great English Baking Death Match.” But no matter what advanced stage your relationship is in, knowing exactly what you’re supposed to do with your money — keep it separate? Dump it all together into a bank account and cross your fingers? — is always fraught. As any couples’ therapist worth her salt will tell you: The two things couples fight about more than anything else are sex and money.
Most committed couples will at some point decide that pooling their funds in a joint account — with two names on it, with two credit scores at risk — is the right thing to do. We say: Bravo! Congratulations! And: Make sure you go in educated, with your eyes open and a good idea of just how much law school debt your SO accrued before he switched to a degree in social work. To help you do that, we talked to Shannah Compton Game, the host of the podcast “Millennial Money” and a wise financial soul, about everything you need to know about opening a joint account without losing your ever-loving mind — or your relationship.
First: Come Clean
Letting someone see your bank statements is a pretty vulnerable, naked, scary thing to do. Maybe someone has a very expensive sneaker fetish they haven’t revealed. Or a secret second family in the Ozarks. And there’s nothing like having another adult around to scrutinize your account balance to make you admit to yourself what your spending habits really are. But money issues don’t go away just because you have separate chequing accounts.
If there are skeletons in the closet and you think you can avoid the conversation altogether by keeping your money separate, you’re missing out on some of the key components of being a couple. Communication. Honesty. Feeling fully known and fully accepted. If you’re going this route, do it fully. Don’t keep anything secret. They’re going to find out anyway. It’s the point.
It’s Easier to Combine Than to Separate
Look, anyone can fall for a grifter. They’re sexy and charming and usually gifted with a quasi-criminal level of charisma — that’s how you get to be a grifter instead of just being an asshole. If you think you might be in a relationship with someone who’s going to drain your joint chequing account and make off with your brand-new Kia without leaving so much as a note, you probably shouldn’t be embarking on a financial life with this person. But you should also think twice about combining your financial lives if you’re not sure if you’re going to be together for the long haul.
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“Be realistic about where you’re headed,” Game says, warning that tumultuous relationships usually aren’t great financial partnerships. “There are those people whose bank accounts are drained because they got into a fight with their boyfriend or girlfriend.”
One safeguard to consider is setting up alerts in the settings of your online banking, so you’ll be notified when an unusually high withdrawal is made or an account-draining cheque is cashed. With some accounts you can also set up limits to the amount that can be withdrawn at any given time, preventing the possibility of a zero balance meltdown.
“You really have to change the mind-set and look at it as a whole. Together we make
Leave Yourself Some Room to Cheat
There’s no more efficient way to bake a thick, durable layer of resentment into a relationship than by scrutinizing each other’s daily expenditures. No one’s personal spending could withstand that level of examination. “You tipped the waiter 25%? He didn’t even fill my water glass” is not a conversation you should have with your SO. There are some ways around it. One is to each have a separate account with a set slush fund in it — take a few hundred dollars a month that’s earmarked for judgement-free spending on whatever you want. Game suggests creating a Don’t Ask Number: “That’s basically an amount either person can spend without having to answer any questions or ask permission. It could be $100 or it could be $500. For each couple that number is going to be different, but the point is that those conversations don’t always need to happen.”
Remember: You Now Have a Single Income
This is really important. Unless you and your husband/wife/soul mate/perma-roommate-with-benefits are somehow earning precisely the same amount of money, you’re going to be dealing with income disparity. Deciding to put your money together is almost certain to lead to feelings inadequacy and resentment. “It can be entitlement versus shame,” Game says, “and you’re always going to find some of both when you have a large income disparity. It’s inherent.” But her advice is, if it’s going to work in the long term, do it anyway, work through the resentments, and get past them. “If you’re a couple and you’re combining finances, it’s about combining. It’s about partnership,” she says.
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Game’s suggestion is to stop looking at it as two incomes but one. “You really have to change the mind-set and look at it as a whole. Together we make this. That’s where a lot of couples fall apart because the person making less money feels bad and the person making more feels entitled.”
Financial Partnerships Aren’t Just About Depositing Cheques
We are not in favour of describing relationships like businesses, but we are in favour of doing a little accounting now and then. Like so: As in any partnership, there are assets that aren’t cold hard cash. There’s sweat equity. There’s knowing how to keep budgets. And this partnership may need a CFO. You don’t have to divide the duties equally. Game says to play to a person’s strengths: “If one person is detail oriented and wants to keep track of stuff, make that person the chief financial officer. Maybe the other person is more interested in charting the goals — set them loose on that.” Game says that also helps people feel like they’re in it together, regardless of the number they’re adding to the account every month. “Finding your way through that is what really creates the balance of joining your money together,” she adds.
Even After You Pull the Trigger, You Still Have to Talk About It
Here’s the thing about money: You don’t talk about it only once. All those resentments and hang-ups, all the shame and recriminations that might have been present when you first decided to do it? They’re going to come back. Habits die hard, and it's hard to always be on the same page when it comes to spending habits, saving for the future, splurging on the present, etc. Game suggests a brief weekly, or even monthly, check-in to see what’s going on with your finances and whether you’re meeting your responsibilities and making progress on your goals. Game calls this a “money date,” which in our opinion is a misuse of the sacred term “date.” “You come together for a 10- or 15-minute money date to chat about what’s going on and then you move on,” Game explains. “If you’re one of those couples who already hates talking about money, go do it somewhere fun. Do it at happy hour or by the beach. You can keep them supershort and still stay on your game plan.”
Our opinion: Schedule it for the car ride to the date, so you can be done with it when it’s time to actually have fun.
Set a Budget
It’s such a stultifying idea. We know. But a joint account means twice the account activity—but double the financial potential as well. Having a basic plan for where that money is going to go will help a) make sure there’s no misunderstanding about what the goals are and b) get you closer to that goal whether it’s a cool vacation or an apartment or a 70-foot yacht on which you can host your friends Barry and Michelle now that they’re decompressing from their high-powered government jobs.
Game says knowledge is power. Simply noticing the $100 you spent on Xbox games last month could be the first step toward a smarter financial life. “Budgeting takes a little extra time and effort, but the payoff is monstrous,” she says. “It can really change your trajectory.”
A good first step is signing up for a service like Wealthsimple and switching on automatic deposits.
Use Some Technology to Make Budgeting Less Terrible
Game is not only a big fan of budgeting, but she’s a fan of the tools that can get you started. “With Freshbooks you can take a picture of receipts, and it will automatically categorize everything,” she says, recommending this app for entrepreneurs, freelancers, or anyone who will need to explain themselves to the IRS every April.
Another app she currently loves is Clarity Money, which she says, “shows you everything, even credit cards, in a snapshot so you can have access to your balance in the palm of your hand.” Clarity will combine all of your accounts to give you the clearest picture of where your money is going, particularly those places you’d long since forgotten about, like recurring iTunes charges or a double Hulu subscription. “Tracking your expenses is superkey,” Game says, “and with two people spending money, it's even more important.”
Of course, you could just keep your accounts separate. But do you really want to share an address while you’re still splitting the bill every time you go out to eat?
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