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This is Mr Llama's first post about Couple Finance. Please see Couple Finance on why Mr Llama has decided to write about Couple Finance.

An analogy to having a joint-bank account, is much similar to 2 person owning one Piggy bank instead of 2 separate ones. This may be a simple analogy, yet, is not as simple as it seems.

In the United States, 1/3 of couples - even the happiest ones - argue about finances at least once a month, and 73 percent say they have money management styles that are different from their partners from a research by Ameriprise.

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Conversation between Mr & Mrs Llama
Personally, Mr Llama have had an hour long conversation on this with Mrs Llama, and.. no conclusion was reached.

There is simply many factors to consider. I would say, more qualitative factors than quantitative factors.

Mrs Llama:
Idea is to put a portion of salary in the joint-bank account for all shared and family expenses. I will have freedom to spend the rest of my salary.

Mr Llama:
Guys being guys, moreover Accounting trained, was thinking that joint-bank account serves little purpose. And does not give a high interest rate like Salary-depositing accounts like OCBC 360, or DBS Multiplier.

Mrs Llama:
Having a separate joint-bank account, can help in segregating expenses, savings and investments.

Mr Llama:
Won't an Excel spreadsheet serve a similar purpose?

Mr Llama:
After thinking, Mr Llama feels that the convenience of having a joint-bank account can bring about convenience. Each of us can just spend directly from there. But, how much do we contribute each month?

Mrs Llama:
Oh yea, how much? Every phase of life requires different amount of expense. Expenses are never fixed, so if the joint-account does not have enough balance, we will have to discuss again.

Mr Llama:
Yea, the idea of allocating a portion, will it mean that we are to spend the rest? 

Mr and Mrs Llama:
Let's talk about this another day~

Mr Llama is 28 years old, and Mrs Llama is one year younger. Both are salaried workers, sadly, among the rat-race.

So, lets analyse - Joint-bank account - Yay or Nay?

1. What is a Joint-Bank Account
Mr Llama did up some research and found out that Joint-bank accounts can be easily set up at any local bank branches. A personal savings account can also be converted to a joint-bank account.

There are 2 kinds of Joint-bank accounts:
Joint-All account requires approval from all account owners in order to allow a transaction.
Joint-Alternate account allows a transaction as long as one of the owners permit.

Let's consider only Joint-Alternate account in this case, as it really does not make sense for a couple to own a joint-all account. A couple should trust each other enough before even considering a joint-bank account.
  • If one of the holder unfortunately passes away, the survivor will own the funds in the account.
  • If any of the account owner becomes bankrupt, the account may be frozen, and the other owners will not be able to access the funds.
  • Every owner is equally, legally bound to the account itself.

2. Joint Bank Account enhances relationship
Research by University of Iowa Assistant Professor Keli Steuber shows that joint investments by people who are engaged can enhance relationship quality.

Mr Llama feels it could be true. It is almost equivalent to 2 individuals owning the same house, why not, same feeling towards owning the same bank account.

3. Reliance on Joint-Account for security
The joint account may be a way one party use to enforce contribution from the another. This shows a fundamental issue in the relationship itself, than a need for a joint-bank account.

Having separate bank accounts can also show that a couple truly trust each other.

4. Separate Bank Accounts maintain the need for independence
Within the relationship, both parties can spend, without the fear of judgement from the other party. T o some extent, this is beneficial as it prevents misunderstandings.

For instance, you love a particular massage service which is not really economical in your partner's point of view. You totally agree with your partner, however, you feel the need to pamper yourself once in a while. By having a personal account, you can enjoy the massage without the need to feel too bad about it.

5.Break-ups
It is really difficult when it comes to separation. As much as possible, Mr Llama does not consider this. 

You will be lucky if the money is split amicably between 2 parties. However, your partner could also withdraw all the money in the Joint-Bank Account and leave you high and dry.

This is not all. If the joint-account is linked to any Joint-bank loan, you may be made liable to repay the loan too.

6. Stage of relationship
Are you in Stage 1, 2, 3 or 4 of the Couple Finance Chart


If you are still Dating, and still young, you are strongly advised not to create a joint-bank account. Especially if both you and your partners are still students, it certainly does not make sense to own one joint-account. There is a risk where your partner may use the Joint-Bank Account to hold you hostage in certain situations, or threaten you, given that both of you are still young.

Mr Llama has had a friend, who diligently paid her dues through part-time job while studying. She was only 22-ish, and was thinking of saving up for future. As good as the mindset is, Mr Llama feels unjust for her, as her partner was not contributing to it. As you can guess, the money in the account was still being used to pay off dating expenses that are jointly incurred.

Joint-Bank Account should only be considered at Stage 2, where both parties are at least confident that they will eventually become husband and wives.

7. Is equal monthly commitment practical?
At every phase of life, you and your partner has to constantly align each other on the values. For instance, for soon-to-be Weds or Newly-Weds, there will be a huge rise in expenses.

Your parents will probably not be there for you. You will have to be responsible for bills and groceries. Not forgetting big purchases like Home appliances or the dream honeymoon you promised your partner.

Each of you may have a different level of income too. Considering all these, Mr Llama feels that equal monthly commitment is not possible for all couples.

Couples have to manage their own expectations of each other, and make adjustments to their own spending habits too. Communication is key, in ensuring that each partner fulfils their financial obligations to each other.

8. Does your partner has a poor Credit-history?
Banks have shared information on each individual's credit history through Credit Bureau Singapore. Having a Joint-Bank Account may be an excuse your partner has to improve his own credit score.

Well, this may mean that your credit rating gets affected too, which can lower both your Loan amount and Chance of loan approval.

9. Decide on the way finances are handled
You will have to sit down with your partner and decide if you 2 still keep separate individual Bank accounts. If separate accounts are kept, then the amount of contribution will have to be agrreed upon. Does the higher earner contribute more? Are certain big expenditures split equally?

10. Partner's occupation
Entrepreneurs or Business-owners may run into personal liability. For instance, sole proprietorship in Singapore are personally liable for any monies owed to other creditors.

Creditors are legally able to get access to the Joint-Bank Account. In this case, it may be better to draw a line and maintain independence in case your partner's business fails.

11. If not a joint-bank account, then where should the money be?
When you are in Stage 3 or 4 of the Couple Finance chart, savings is crucial. If your savings with your partner is not in a joint-bank account, but sitting in a personal account with good 2-3% interest, additional effort has to be taken to ensure that an amount is set aside as emergency reserve.

This requires discipline, and effort. Partners have to work together to identify the amount of reserves, and whose account to store it at. Reserves are cash never to be invested, or put into fixed deposit.
They are meant to be liquid, and used for emergencies.

12. Communication & Understanding
Humans are essentially unique; Males and Females think differently. Males are generally more numerical, while females tend to be slightly more emotional.

So, it is important that each of you communicate your understanding of financial commitments to one another. The moment one of you begins to compare, conflicts arise.

For instance, one may think of commitment as offering a large sum of money in one go, while the other may see constant streams of money flow into the Joint-Bank Account as a good commitment.

Amount vs Frequency. Simple as it sounds, it can lead to misunderstandings.
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Questions you should ask your partner before opening a Joint-Bank Account

Therefore, before even opening a Joint-Bank account, you should sit down discuss with your partner.
You and your partner should be able to answer below questions:

1. Are you okay with your money being mine?

2. Are you okay with me paying more? And vice versa.

3. Will you wish to maintain a personal bank account on top of the Joint-Bank Account?

4. Does our current stage of relationship require a Joint-bank account?

5. Do we credit our salary into the Joint-Bank account?

6. How if one of us require an emergency lump sum?

7. Are you willing to contribute monthly? Or other frequencies?

8. Are you willing to fork out more?

9. Is the Joint-Bank Account only for Joint Expenses?
(ie Couple dating, Meals together, Marriage costs, Couple travelling)

10. Shall we put in a fixed amount monthly, or in terms of proportion of our incomes?

In the case of a couple only maintaining one Joint Bank account another set of questions applies.
Well, in 2014, 58% of couples who owns Joint-Bank Account, does not have individual separate bank accounts. The  research also showed that millenials (23-38) are more likely to merge finances before marriage.

These are questions to be thought through before diving into a single Jointly-Owned account between you and your partner.

Here goes:
1. Are you okay with us knowing each other's expenses?

2. Are we going to own separate Credit Cards? Or share similar Credit Card schemes through Supplementary cards?

3. How if one of us resigns or gets retrenched?

4. Have an upfront agreement to get each other's approval on big purchases?

5. Are our spending habits similar or different? Will this cause unnecessary conflicts?

6. How much can be used for personal expenses?

7. Are our salary differences acceptable to you?

8. In the case money is used for investments, how will the losses or gains be accounted for?

Conclusion
One way to know if a joint-bank account works for you, is to test out having one for a few months. Since it is of an experiment nature, expectations of it is generally low.

Periodically, check in with your partner to see if its working, and how you can contribute not only financially, but also administratively to make each other's life better.

In the case that you feel that you cannot completely trust your partner, or fear the breach of trust, a oint-bank-account is definitely not for you. At least, for now.

How to achieve Financial Harmony
Communication is key, not only to financial issues, but to all issues between any couples. You and your partner should regularly initiate discussions on financial issues faced. Plans should also be made for future financial events. If possible, you can even discuss about Retirement.

According to a Ameriprise study, 54% of couples listed a different spending limit as compared to their partner's. On top of this, human judgement changes over time. As such, it is important to regularly check-in on your partner to ensure you manage your expectations according to his/her changes.

More than often, quarrels are due to underlying reasons or issues between couples. They merely surface through different aspects, with finances being one of it. So, make sure to truly understand your partner before even considering your joint-bank account.

Please feel free to comment below if there is anything else to be considered :)
Mr Llama wishes to create a comprehensive guide to help all Young couples out there!

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