Sunday, November 15, 2009

Joint Account vs Individual Account

I feel that choices often defer based on the individual's background. My parents are for joint account because they have done it and feel it is the best way to live in unity and to emphasize trust. They also feel like that way every monetary decision is made jointly. My in-laws on the other hand, will vouch for separate account because they did it that way and it was their way of finding peace. Especially my mother-in-law who feels very strongly about it. They feel it is easier for everyone to keep their money and make contributions accordingly. One might feel that another may use the joint account to control the other's activity.

My thoughts- I don't know which is the best but I do not think others should intervene in a couple's decision. I feel that joint is more common with low income earners, and I think the reason being, every dollar is vital, they often live pay check to pay check and selfishness is not an option. Even some low income earners that are non-married, and living together, they tend to share more. Also it is easier when people have children, but then again the rich can often get away with just having a joint account for the kids.
My problem with all of these is if you start of a marriage one way, do not attempt to switch when circumstances change. No matter what your reasoning might be, it is often wrong. Most of the time problems arise when it was once joint and then one wants separate.

I know of a woman that is no longer living with her husband, his reason is he is not respected, her reason is she does not want a joint account and he insists on that. I was quite confused, so in my query I learned that they have always had a joint account. But she added that he controlled everything and never gave her any money. This has been going on while they lived in Nigeria, enough to have 3 or 4 kids with the oldest being 17 years old. Hmmm I thought, coincidentally the time she was voicing her right to have a separate account is also the same time that she began to earn her nursing salary. I am not saying this man isn't controlling, he probably is but my point is she put up with it all this while until she started making more money. A wrong is always a wrong, it should not change based on your situation. Note it may only be a coincident but do you see how odd it is, because it never bothered her this much until now. She also wanted to buy the house she is living in ow and for some reason her husband said no, however she insisted and bought the house without him and moved out with her children. But before she made decisions with her husband, it was once important that one must convince the other that it was a smart move before buying anything but at this time she felt that she did not need his support. I mean why not just give him the divorce papers. Interestingly, those are some of the down sides of separate accounts.

But problems may arise even the other way around. I know a nurse who met his wife when he was studying for his MBA. She had a small job and so was contributing only 20% to their family income. Well she requested that they have a joint account but for some reason he refused, and whatever his reasons were bothered her slightly. Well they had a daughter and then a son, and she finally finished school, her new job moved the family to Arizona to take a very honorable salary position. She was making 2.5x his salary now and bought him and herself a mercedes benz. He was slightly bothered that everyone termed it her money and her car. At that point, he felt that she was misusing 'their' money and they may not have a lot to save and he asked then for them to have a joint account. Bad timing isn't it? very bad timing? misusing for you, may not be for me and vice versa.

Where do we draw the line with separate or joint? although it is separate, can you do whatever you like with your money? is it really yours or ours? Or although it is joint, can you spend 50% more than me on whatever you like, especially since you make more than me and hence contribute more? Ok so you decide to be separate, how do you split the bills especially if one makes 3x more than the other?

So here are some pros and cons of both. Separate- pros complete freedom to do as you choose with 'your' money; you can surprise each other without the other finding out. cons- it is a marriage and you are supposed to be one (there should be no separate in matrimony); if you make more, and you buy expensive things that the other does not approve of or you make decisions by yourself that leaves you in the end by yourself.
Joint- pros you make decisions together and agree upon a fixed family budget, the ins and outs when it comes to money is always accounted for. cons- everything has to be discussed or explained that might bother some people; it may cause problems if different spending styles, ex. one of you is more high maintenance; It is difficult for some to claim they bought the other a gift because it is with 'our' money.

If you feel strongly about separate maybe you shouldn't have gotten married just yet, address those issues before jumping the broom. If you feel so strongly about joint, make sure it is for the right reasons, and not because you are contributing the least. My suggestion is do both- I haven't met anyone who could account for using both so I am not claiming that it is the solution. But one might consider having a joint account for bills and decisions like buying a gift for a family wedding, but also have a small separate account for personal items.
What ya think? I am interested in hearing your thoughts.

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