Bank Account Mergers

Decision on account type

Human relationships are delicate and have grown more complex over periods of time. Needless to say that money has come to play a big role in relationships. While no relationship is perfect, genuine efforts on couple’s part could go a long way in ascertaining a stable future for the bond. Channeling the hard-earned money in the best possible way could ascertain the financial stability of the couple, whereas one false step could make each of them bankrupt. Such understanding gains added importance today where most married households and couple preferring live-in relationships have two incomes. More so because individuals have established financial setups even before they begin living together and the need for an agreement on how to share recurring expenses becomes all the more important.

Planning a financial agreement

The decision to maintain a joint account or separate accounts therefore, requires serious planning and thought. Before deciding on the type of financial arrangement, a couple needs to engage in several important steps.

Open discussion

At the outset, a couple should engage in an open discussion where every matter of financial concern is laid bare for mutual discussion. Discussions on existing debts of both partners, mistakes one might have made by not paying on time, and savings and other financial assets or liabilities that each partner have are very important. A couple must remember that having decided to marry or live together means taking on each other’s debt and assets. Both partners must begin seeing the money as theirs instead of his or her assets or liabilities.

Planning a budget

Secondly, a couple must ensure that the budget is well-planned. The budget should be so planned that every rupee is accounted for. Sometimes it is important to allow each other spend part of the money that he or she will not have to account for. The amount thus spent may depend on the circumstances but it has to be ensured that enough is left for meeting obligations, saving, or to free both from any debt incurred before it begins to weigh too much on the income.

Financial goals

Next, a couple must plan and set objectives together. Such financial goals will help each other communicate effectively about money matters and also keep each other focused while helping in prevail over turbulent periods in the future. Some common goals can be saving a decent amount for retirement, saving for upfront payments for a new house or for saving an adequate amount that will enable both partners to retire by a certain age. If children have been planned, a couple may find it necessary to think more along these lines. Further, after having a child, and if it is so planned that either one of the spouses would remain at home, finances will have to be adjusted accordingly in terms of education expenses and other necessities for the child.

Regular budget meetings

It is also important to engage in budget meetings once every week or on a monthly basis. A couple can set up a system that allows each partner to know how much money has been left in the expense account at all times. Personal accounting software can be of good help as one can check balances quickly. It is also a good idea if most bills are written out together as well as miscellaneous expenses kept track of together. Such budget meetings will help the couple significantly to remain on track.

It is now up to the couple to decide the type of account it chooses to maintain, one that is mutually beneficial and the most acceptable. A choice can either be made on opening a joint account, maintaining separate accounts or combining the two types so as to have some sense of financial autonomy for personal use. A look at how these accounts work may be helpful in deciding on what best to choose.

Joint account – benefits and drawbacks

It is often awkward to talk with a partner about money matters, especially if one of the partners is known to be irresponsible and has the habit of spending more than one’s portion of income. However, a joint account is quite often one of the easiest options in terms of logistics as both partners’ money goes into a single account from where household and other expenses can be drawn. It is however, important that account holders communicate with each other while making most purchases and the amounts spent should be kept track of manually or with the help of personal accounting software.

On the other hand, as mentioned above, a joint bank account might be a problem because if one of the partners spends excessively and doesn’t keep track of expenses, it can be easy to overdraw the account regularly. A joint account can also become problematic if the relation between partners is not legally binding. One needs to trust a partner a great deal and have faith that either one will not simply disappear with the money in the joint account. One way to prevent such a situation would be not to put in all the money into a joint account. If there is an income gap between the couple, only that amount needed to pay for essential expenses such as house rent and food costs can be put into a joint account, leaving the remaining amount with each partner to pay for their personal expenses.

Freezing a joint account

Couples usually freeze their joint accounts if there is a marital dispute between them. But freezing joint accounts can also be for other reasons, such as irresponsible spending by a partner or by both. Getting the bank to freeze a joint account is simple and quick.

The first step is to contact the bank that has the joint account. This can be done either over the phone or by personally visiting the bank. The lender will ask for the account number and necessary identification questions for security reasons. The bank can also be intimated in writing that the account should be kept in a frozen state until instructed otherwise. It will keep the note as a letter of record if any dispute were to arise in the future. The request note should contain the account number, name and address of the account holders. It is also important to discuss with a partner about what is to be done with the frozen joint account. If it’s a case of divorce, the partners should come to an agreement as to what each other’s share would be from the joint account. If the account has been frozen for matters other than divorce, the partners should discuss among themselves on when to reopen it and ways of using it prudently henceforth.

Separate accounts – feasibility and problems

Many a couple is more comfortable when separate accounts are maintained. Each individual will have a separate account and the income of each partner goes into his or her personal account. A couple can decide to divide household expenses so that each partner is responsible for some of the costs which are paid out from the personal account. This option also does away with the responsibility of accounting for what the money has been spent on as long as bills are paid. This method can also work smoothly as long as a couple has come to an understanding on which expenses are to be met from each account, and as long as one trusts the partner to oblige with his or her end of the arrangement. It also allows each partner to have control over his or her money.

On the other hand, this arrangement can lead to problems when it comes to shared goals, such as saving for retirement and vacations. Things can also sour between couples if one partner fails to pay from his or her account.

A slice of both joint and separate accounts

A good solution to any account dilemma couples may find themselves in would be having both separate and joint accounts. The partners can maintain separate accounts which could be used for discretionary spending, but they could also maintain a joint account for shared expenses. Under this arrangement, each partner contributes with a percentage of his or her income into the joint account every month.

Shared responsibility

This account would contain money to pay for necessary bills, groceries, expenses towards children as well as for long-terms savings objectives. Each partner will have some percentage of his or her respective income to spend for personal use, which can either be spent entirely or even saved, depending entirely on one’s personal discretion.


However, this sort of agreement has its share of problems too, especially if one of the partners earns significantly more than the other. For instance, if a couple decides to put in each month 80% of the combined income into the joint account, the one who earns Rs 50,000 will have Rs 10,000 each month for discretionary use, while the partner who earns Rs30,000 a month will have just Rs6,000 for personal spending. This can lead to resentment in some cases.

Ultimately, couples will have to decide what the best option for them is and should go ahead setting up a bank account structure that would help them reach the goals they have set.

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