Should you have a joint bank account? Here’s what to know first

The problem reads like a Leaving Certificate question: If Jess and Dave are engaged and moving in together and Jess earns €75,000 and Dave earns €40,000, is it fair they split rent 50/50? Even if Dave wanted to move somewhere cheaper?

It’s a dilemma many couples face without the benefit of an answer sheet and a test result to tell us who got it right in the end.

When it comes to research on what causes relationship breakdown, financial disharmony is a repeated guest star and usually sits around the top three reasons given for splits.

If money can be such a marriage killer, why haven’t we come up with the perfect solution to manage it when we shack up with the love of our life?

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[ Joint accounts: if one of us dies, can the other access the money? ]

One reason is that every couple has different values, incomes, assets and cultural expectations around who pays for what, making a one-size-fits-all rule unlikely to work for everyone.

The other is due to societal and economic changes like record numbers of Irish women participating in the workforce, the introduction of divorce, the number of two income families rising, gender roles shifting, costs increasing and the legal recognition of LGBTQI relationships.

The money management relationship blueprints handed down by older generations often do not apply when two members of the household are bringing in income, expect to have equal say over where it goes and are responsible for paying the bills.

Millennials are more likely to keep their finances completely separate (38 per cent) over Gen Xs (13 per cent) and Boomers (11 per cent).

While a Newsweek Poll conducted this year shows that Gen Z, were less likely to split bills 50/50 in a couple.

Instead 40 per cent of them believed expenses should be split according to income, with higher earners paying a higher proportion. In comparison just 26 per cent of Gen Xers believe it’s fair for the higher earner to pay more than their fair share.

On TikTok, a Gen Z heavy space, videos with the 50/50 relationship hashtag have racked up 133.7 million views with the most popular content titled “Why 50/50 relationships do not work.”

It might seem counterintuitive that the generation raised in the advanced stages of gender equality is turning its back on splitting the bills regardless of pay and gender. But it’s equality or the lack of it when it comes to non-financial contributions to the household that’s causing the turn.

Various international studies show women are still doing the majority of housework, house admin and child care. Anti-50/50 relationship financial creators argue that until those responsibilities are shared equitably by partners, then neither should the financial responsibilities.

So if there’s no one hard and fast rule for everyone, what are some of the different options available to couples merging finances?

Joint or Separate accounts

If you’ve decided to stay together the first issue is to consider if having a joint account or maintaining separate finances is for you. There is also the option of having a joint account for particular savings goals like a house deposit or wedding fund where you contribute an agreed upon amount every month. Or a bills account where direct debits for the gas and electricity are set up but still maintaining separate accounts where individual paychecks are deposited. This means the personal savings, pensions and discretionary spending after the bills and joint goals are taken remains solely the business of each partner.

The joint vs separate account issue for couples divides the personal finance community. US guru Dave Ramsey is famously hardline on the issue, often saying “married couples shouldn’t have separate bank accounts.”

Ramsay says combined accounts lead to “better decision making” and “forces communication” between couples while encouraging them to share their “fears” and goals,” making the marriage stronger in the end.

Pro joint-accounters like Ramsay often point to research which suggests couples who pool their finances tend to report greater relationship satisfaction.

This was backed up by research published in March 2023 which examines a causal relationship between bank account structures and overall marital happiness by following couples who initially had separate accounts but merged them for the study. Indiana University researchers found that shared accounts led to greater transparency around money within the relationship and led to couples agreeing more to shared goals.

However before you go downloading joint applications to the bank, it’s important to consider the cons of one shared account.

For Carol Brick, managing director of HerMoney, having one joint account “makes sense” in cases where one partner is a stay home parent and one partner has an income.

That way the partner without a salary will still have access to cash when they need it and they have an overview of the family finances.

But they can become problematic during a separation as the two parties on the account have a right to access the money at any time and without warning.

“We have seen the joint account being emptied overnight in certain cases. When you have one spouse putting all their salary that can be devastating and it’s very hard to get it back,” Brick says.

“It’s a major downside when it comes to joint accounts, it’s well and good sharing everything but it becomes very risky territory during a relationship breakdown.”

Author and financial influencer Ann-Marie Gaynor, known as The Irish Budgeting Mammy, knows a joint account may feel a bit overbearing for some people, now that their spending is on display for the scrutiny of their partner.

“Personally I feel having some piece of financial independence for both parties is extremely important. Life can throw some difficult situations and no one wants to have to deal with a wait period to access bank accounts following a death,” she says

“Keeping a personal account in your own name where you receive your wage works very well, while also having a joint account (bill account) where both parties transfer money on pay-day either manually or by direct debit works particularly well.”

Lastly, it’s important to note in these discussions that unhealthy bank account management in relationships can be a sign of financial abuse. According to Women’s Aid signs to look out for include having to justify all the purchases you make to your partner, not being allowed a bank card, having the joint account suddenly emptied and not being ‘allowed’ to buy personal items. If you think your partner is monitoring or controlling your spending in a way that is hurting you, call Women’s Aid on 1800 341 900 for more information.

How to split expenses

The overwhelming advice from experts is that this is dependent on each couple’s circumstances, beliefs, contributions to the home and incomes.

A couple may wish to split the rent or bill proportionality for a number of reasons. For example, one partner works from home and is happy to pay the extra rent for an apartment with a second bedroom to turn into a study.

If couples are splitting bills proportionally according to income one way to calculate a split is to take what each partner earns after tax then work out in percentage terms what their income makes up in terms of total house income.

For example, Eric and Pete earn €40,000 and €60,000 after tax respectively, they earn 40 per cent and 60 per cent of the total household income (€100,000). So if a gas bill for €400 came in, Eric would pay €160 and Pete would pay €240. The idea is that the lower earning partner doesn’t end up paying more of a percentage of their income than the higher earning partner, which would happen if they went 50/50.

Gaynor agreed that splitting bills down the middle “can put a strain” on the lower earner however it might be easier to make them responsible for the cheaper bills overall while the higher earner takes the more expensive ones.

Another solution says Brick is to have a joint account for expenses where partners put in an agreed upon amount of money (whether 50/50 or not) to cover bills.

“When both parties are working they usually pay 50/50 and they have an amount that comes out of their separate accounts to the joint one via direct debit on pay-day, that’s pay-day not the day after.” she says

Brick says this might head off the resentment that comes from couples nickel and dining each other over expenses. Nothing evaporates romance like being sent a request on Revolut for “dinner €30″.

“That’s going to be a source of disagreement straight away. That is creating groundwork for financial arguments,” says Brick.

By sitting down and putting recurring joint expenses like rent, bills, holidays, healthcare, childcare, pet insurance etc into a spreadsheet, couples can work out what they need to put into a joint account every month to cover them.

That way says Brick, the money is always there without the fight and without even having to think about it.

Brick says putting in an extra 20 per cent “for treats” such as holidays away or simple pleasures like after-work drinks has been key to keeping the drudgery out of managing finances with her husband.

“I always know there’s something in the account for a takeaway and the wine on a Friday night and we have never had a bad word between us about it,” she says.