Considerations for merging finances
PERSONAL FINANCE | SEPTEMBER 29, 2020 | BARBARA JONES
Merging finances as a couple can be quite overwhelming, whether you’re deciding to fully join your accounts, join them but keep some wiggle room, or maintain two separate accounts. Peoples State Bank has prepared some money management tips to make these decisions easier based on your relationship.
Methods Involving Joint Bank Accounts
Choosing to join your finances is not a one-size-fits-all decision. Many different options may work well for you. Communication is key to deciding what works best, so be sure to choose a method you and your partner are comfortable with, and that you’ve talked through.
Complete Joint Accounts—A fully joint account for couples consists of one account in which both of your paychecks are deposited, meaning all money is available to both partners. This method is known as complete co-mingling. It means you’ll merge all your finances into joint accounts, including all bank accounts, credit cards, investment funds, etc. This option may not be right for everyone. Explore Peoples State Bank’s checking and savings accounts to see if a combined account might be right for your relationship.
Shared Checking or Savings Account for Expenses—If you are comfortable making purchase decisions together, you may find it useful to have a shared checking or savings account for major purchases. This frees up your individual checking accounts to be used independently. For this to work, both you and your partner will transfer equal portions of your separate checking accounts into one joint account on a scheduled basis. One way to simplify the process is to set up an automatic transfer from one account to another. Another option with a shared checking or savings account is for each person to transfer a proportionate amount of money, based on their income. For example, if one person makes $2,000 a month, and the other makes $1,000, then the proportion would be two to one. But be sure both partners are comfortable with the ratio and keep the line of communication open to prevent any feelings of resentment or unfairness.
Methods to Maintain Separate Accounts
For some couples, it might work best to keep finances entirely separate. If money is a common point of contention between you and your partner, or if you enjoy having a sense of freedom with the income you earn, one of the following methods would probably work best for you.
One Income Funding Two Accounts—Not everyone can afford to do this, but if you can live on one income, this may be a great option to save toward long-term financial goals, like buying a house or car. With this approach, you and your partner choose whose income you’d like to use to fund your everyday checking accounts. If you choose the higher income to fund both your spending, this income must cover both partners’ purchases. Meanwhile, the second paycheck is deposited into your savings account. You can work together to decide if this works better as a long-term or short-term solution.
Everything Remains Separate—If money causes tension in your relationship or you’d both rather spend and save independently then fully separate accounts may be best. This method works well for couples who prefer to keep money out of their relationship or who have drastically different spending habits.
Determining which option is best suited for your relationship is a great way to build your connection and make it even stronger. For help setting up a joint bank account or identifying which solution is right for you, contact Peoples State Bank today. We can help you navigate your finances together.
Barbara JonesVice President, West Allis Branch Manager
Barbara Jones was promoted to vice president, retail team leader, southeastern Wisconsin. As branch manager of the bank’s West Allis location, Jones has built relationships with Peoples’ retail and commercial banking teams. She will oversee all retail operations in southeastern Wisconsin, including the bank’s new location in Waukesha. Jones consistently delivers extraordinary service and follow through for the bank’s customers in the growing Milwaukee area market.