Couples, Read This Before You Open a Joint Bank Account

Catherine, 27, and her boyfriend Mark, 28, have been together for seven years and lived together in Toronto for two and they’ve always kept their finances separate.

“We’re not planning on buying a house, we’re not having kids. We’re not planning on having a wedding so I don’t really see a point. Why do people have joint accounts unless they’re planning on doing that stuff?” she said.

While that kind of financial independence might not sound like a big deal to many millennial and Gen-Z couples, money expert Jessica Moorhouse says it goes against a powerful narrative perpetuated by older generations—that once you’re serious about someone, your money should become “our money.” First comes love, then comes a joint bank account, or something like that.

A recent Manulife Financial survey shows that 21 percent of Canadians don’t combine finances with their partner. Of those couples, 41 percent cited ideology—which includes having different financial priorities, like saving up for a home instead of paying down debt—for staying financially independent.

For younger people who are in a committed relationship, it may not make sense to combine finances in a joint account. If you’re living together, you can simply divide expenses based on what makes sense, based on your income.

For example, if you make 60 percent of your household income and your partner makes 40, you can handle 60 percent of your total expenses. Bills should be based on what you can individually afford, and you don’t need a joint account for that—you just need to have a conversation about it.

“A lot of people jump into a relationship or marriage but they haven’t set up the groundwork. You should have a plan to talk about finances regularly,” Moorhouse said.

According to family law expert Leanne Townsend, there are pros and cons to opening a joint account with a significant other. One big pro is full transparency—everything is out in the open and there’s no sneaky spending. Both people have full access to how the money is flowing in and out of the account. Sure, it might cause some fights about how much you spent on drinks, but at least there are no financial ambushes.

Another way to avoid financial surprises is to be upfront about your situation, even if it means having a tough conversation about how you maxed out your credit card with a last-minute trip to Mexico. According to the Manulife survey, 10 percent of Canadians don’t feel comfortable sharing their complete financial situation with their spouse. That number is probably even higher for couples who aren’t married.

Joint accounts make a lot of sense for some types of couples. It’s a no-brainer when one partner is making little or no money—for example, someone on mat leave or a stay-at-home parent. When kids are part of the equation, it may simplify paying bills by having a single pot or account to draw from. But with that added convenience comes added risk.

Elaine is originally from Toronto but she uprooted her life to New York at the age of 34 to move in with her boyfriend. “I’m a serial romantic; it’s what I do,” she said. After nearly two years, things didn’t work out and she moved out in September.

Even though they were living together in his Manhattan apartment, splitting up was “no fuss, not that difficult financially,” she said, because they didn’t have a joint bank account. She says it took her about two hours, spread out over a couple of weeks to shut down their shared expenses such as grocery delivery service, boxed meal subscription, as well as her gym membership, which he was paying for.

If your relationship doesn’t work out, and you’re not married, having a bank account with both of your names can make things more complicated. The level of complication depends on where you live.

According to Townsend, property rights rules vary in the U.S. from state to state. In Canada, it depends what part of the country you’re in. Couples in Ontario, Quebec, Alberta, and the Atlantic provinces don’t have the same property rights when it comes to finances as married couples do. That means only accounts with both of your names on them are to be divided up 50-50.

But if you live together in British Columbia, Saskatchewan, Manitoba, Nunavut and the Northwest Territories, then money in any account—joint or not—is subject to the same laws as if you were married.

Townsend specializes in family law and cases involving domestic violence and spousal abuse. Based on the stats, and what she has observed in her line of work, she says women in particular, who are considering combining their finances, need to understand how to best protect themselves.

“Women tend to earn less; the pay scale is not equal. Women are the ones who, if there are children, often take more time off work and become more financially dependent,” she said. “Definitely it’s more women who are disadvantaged by living common law and not having the property rights that they would have had if they’d been married.”

Joint accounts come with added risk because if one person isn’t monitoring the money, one person can take advantage. “You really have to trust that person. If things aren’t going well, one person could take the money out of the account if it doesn’t require two signatures, which it usually doesn’t. And then announce to you that they’ve left,” said Townsend.

Although Moorhouse and her husband keep their finances “mostly separate,” they now have a joint account for travel and other short-term savings goals. “If it feels like society, or your partner or parents are telling the right way is to get a joint account, just know there is no actual ‘right way’ to manage your money so go with your gut,” she said.

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