This Is Ramit Sethi's Advice on Whether to Join Bank Accounts

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KEY POINTS

  • Combining finances can be a tricky thing at any stage of a relationship.
  • If you're going to combine accounts, Sethi suggests having a joint account for shared bills and living expenses.
  • You and your partner should then each maintain a separate account you have autonomy over.

His advice could end up being a good solution for you and your partner.

It's an unfortunate fact that money tends to be a big driver of conflict among romantic partners. And that sort of conflict has the potential to escalate when you make the decision to combine your finances and open joint bank accounts.

On the one hand, it's easy to argue that if you and a romantic partner are going to share a life, then it stands to reason that you might share your finances, too. And if you have bills you're jointly responsible for, like a rent or mortgage payment, then wouldn't it make sense to put your money into an account that you both manage?

Financial guru Ramit Sethi agrees that opening a joint bank account isn't necessarily a bad idea. But if you're going to go this route, it pays to heed his advice on how to best pull it off.

The right way to combine bank accounts

In a recent tweet, Sethi explains that the simplest way for you and your partner to combine accounts is to have a joint account where you pay your shared expenses -- things like your property taxes, utility bills, and groceries. But then, Sethi says, you should also open what he calls a guilt-free spending account for each of you, where you can spend the money in that account however you please.

His solution really is a good one. Let's say you're someone who likes to spend money on clothing, but your partner couldn't care less if they were wearing a $200 designer shirt or a $5 discount rack special from Walmart. It might bother your partner to see you taking $200 withdrawals from your joint account to buy yourself clothing. And that could lead to a series of arguments.

With Sethi's solution, that doesn't even have to be a conversation. That's because you and your partner will each have your own separate bank account you can take withdrawals from as you see fit. So in the case of your designer clothing, your partner may not even have a clue as to how much you're spending. And that's okay, because that money is coming out of your personal pool of funds, not theirs.

A good way to keep the peace

The last thing you want is for a difference in spending habits to get in the way of an otherwise solid partnership and romantic relationship. Opening up a joint bank account to pay shared bills certainly makes sense. But it also pays to retain some financial freedom by maintaining separate accounts for you and your spouse to manage as you see fit.

As far as funding those accounts goes, well, that's a discussion you'll need to have. You may decide that you each get to put 10% of your income into your own personal account. Or you may decide on a preset dollar amount, like $300, that goes into your personal accounts every month.

You and your partner can, and should, feel free to work out an arrangement that suits you well. But it's important to give yourselves the freedom to spend some of your money as you please without having to worry about upsetting the other or asking each other's permission.

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