All in the family: What couples should know about shared bank accounts

TORONTO — A relationship is all about sharing, but when it comes to finances it can get complicated.

Take shared bank accounts. Evidence suggests couples benefit from fully merged finances, but younger people are increasingly moving away from the practice, and many financial experts recommend against it.

For those partners considering how to arrange finances as their lives become increasingly entwined, there is at least some consistency in the advice in that whatever approach, it’s based around open communication and a shared vision of where they’re headed.

“When it comes to money, it's never just about the dollars and cents,” said Stacy Yanchuk Oleksy, chief executive of Credit Counselling Canada.

“When couples are looking at joining finances, or even just talking about finances, they have to get under the surface, they have to get below the budget into, you know, who am I with money? How was I raised with money? What do I want with money? What stresses me about money? All that interesting, juicy stuff that we don't like to talk about.”

The broader conversations prompted by the process of joining accounts is one way it might help a relationship, said Jenny Olson, an assistant professor of marketing at Indiana University’s Kelley School of Business.

Olson led a study released earlier this year that found combined accounts actually led to better relationships.  

“At the end of two years, the couples that had joined accounts were significantly better off, had higher relationship quality.”

The results went further than previous studies that had only established a link between shared accounts and better relationships, but were unclear on which came first. 

Along with changing how couples talk about money, Olson's study found other potential positives — reducing difficult-to-justify purchases because of the increased transparency, and generally preserving the communal nature of a relationship. 

“Money is one of the top reasons people get divorced,” said Olson.

“So if you can be on the same team with money, you know, you're going to be better off in the long run.”

The practice of combined accounts does however seem to be getting less common. Olson cites studies from the past 20 years that found between 52 and 65 per cent of married and live-in couples used only joint bank accounts, while 10 to 15 per cent reported completely separate accounts. 

That compares to a survey from TD Bank that found 47 per cent of married couples merged their spending and accounts, while a survey from the bank last year found that 49 per cent of millennials have no common accounts with their partners.

Many couples choose something in between, having a combined account for household expenses, while also keeping separate accounts to maintain some autonomy. 

But Olson’s research found that a hybrid approach didn’t yield nearly the same benefit as fully merged accounts.

“One of the reasons that couples that had a partial merging scenario didn't fare as well is because you kind of have one foot in the door and one foot out the door, so you’re not all in.”

She said there were certainly numerous circumstances where it’s not the best choice for a couple, whether its having children from a previous marriage or business accounts or other complications. 

Yanchuk Oleksy at Credit Counselling Canada however said that she always recommends couples keep accounts of their own to maintain autonomy and continue building a credit profile, even if they do combine some finances. 

“It's OK to have some joined, but each partner should have their own checking account, they should have their own savings and they should have their own credit.”

She also noted that while shared accounts can be divided fairly easily according to provincial laws in the event the relationship ends, shared debts or credit are still both partners’ burden after, so a much deeper conversation is needed before co-signing on loans. 

For those combining some accounts, she said it’s important to figure out the right proportions of how much each partner is contributing and that it reflects their income. 

Partners should also make clear what the joint account is going to be used for, whether just groceries and home payments or personal spending too. 

She also recommends at least monthly money meetings or money dates where partners check in to see if their shared finances are working. 

Financial planner Natasha Knox, founder of Alaphia Financial Wellness, also recommends partners always keep some personal spending money.

She said joint accounts can increase the visibility towards shared goals, but couples with separate accounts can also get a view of their overall financial picture through spreadsheets or other means. 

The important thing is to have transparency, said Knox.

“Separate money is OK, secret money is not.”

It’s important to listen when having foundational conversations about money with a partner that sometimes bring up harsh truths. 

“Listen to your partner, listen to what they have to say, and try to be a safe person to share with,” said Knox.

“It's important when we're listening to our partners in that conversation to manage our own responses to what we're hearing and to stay curious and to stay open and to try to resist the urge to scold or accuse or to run into fear.”

She said that overall, she’s found that it’s not so much the bank account setup that determines the outcome, but how well partners talk about money. 

“The communication piece is a far more reliable indicator, because when people are great communicators and they're both committed to transparency and they're both aligned with their goals, that is a much bigger indicator of their overall household, financial wellness and how smooth or not smooth things are going than whether they have separate joint or some hybrid.”

This report by The Canadian Press was first published Sept. 7, 2023.

Ian Bickis, The Canadian Press