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Merging Individual Finances After Marriage
Pros And Cons Of Joint Savings
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Embarking on life's journey as a couple, you are filled with innumerable dreams and aspirations. Coupled with this you also have joint responsibilities. Amidst other things it is time to discuss your attitudes to money and share details of your financial life.
To merge or not to merge?
There is no universal solution to this question. This depends on each individual's trust and commitment quotients. Generally the first question that comes to mind while considering merging finances, is whether to have separate or joint accounts.
Couples have three options here:
- Joint accounts.
- Separate accounts.
- Some joint and some separate.
A) Joint accounts:
Most couples opt for joint accounts. Marriage implies utmost trust and togetherness and joint accounts seem an automatic choice.
The advantages of joint accounts are:
- Couples get a sense of togetherness and there is no secrecy between partners. Everything's in the open and this is a good foundation to build your married life on: "What's yours is mine and what's mine is yours".
- There's less paperwork here and your financial health is known in a single statement.
- It makes budgeting easier as you don't have the additional burden of checking out individual accounts.
- It's easier to handle expenses when it's a single and joint account as all bills will be taken care of jointly and you have the added advantage of working on your finances as a team.
The down side:
- A joint account affords you lesser privacy and independence (i.e. if you feel guilty about your expensive shopping sprees).
- Filing taxes can be a bit of a nightmare.
- Each spouse becomes liable for the other - financially. This may not be such a great thing if one partner is running a business.
B) Separate accounts:
Some couples prefer not to mix money and marriage. They'd rather continue with their separate accounts.
The up side:
- It offers more autonomy and you have your financial space intact.
- Easier to file taxes.
The down side:
- You'll have to work on how you'd split expenses and who is going to pay for what. It involves more paperwork and more instructions to banks and a continuous monitoring on a weekly basis, at least.
- You might miss out on the bigger financial picture - namely - your long-term goals due to lack of communication.
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