• Wednesday, May 29, 2024
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BusinessDay

As a couple what account is best for you and your spouse?

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Whether or not couples could have joint account s, or run personal accounts has been viewed in different forms, with dissenting voices as to what it can cause to a marriage. However, financial experts hold a different view as they believe that while a joint account should be used for family expenses such as the house rent, utilities, bills, savings for retirement, school fees for the kids, buying a new family vehicle, and taking a family vacation a corresponding individual discretionary account should be maintained by spouses. This can help simplify things when it comes to paying off bills, yet also help keep personal spending in-check especially if you like working with a budget.

Opening a joint account and sharing finances may seem like a good idea at first, but you must consider each others’ spending habits, outstanding bills and loans, incomes, investment portfolios, future financial goals and debts. According to relationship expert Phil McGraw, “Joint accounts are a bad idea, especially if you’re on a budget. For a joint account to work, both people have to be highly responsible with their finances. Very few people have the ability to be that financially disciplined.”

Operating a personal account will enable you continue to pay your own pre-existing credit card debt, student loans, and other financial obligations from your personal checking accounts without placing your burden on your spouse with a joint account, says Deborah Fowles, financial expert.

Absolute dependence on joint bank accounts can also cause issues in a marriage when spouses fail to inform each other of their activity in the account. The convenience of joint access to funds in the account can also cause overdrafts and bounced checks if one partner makes an unexpected withdrawal or payment in the account. If one spouse is less financially responsible than the other, separate accounts keep much of the damage contained to one spouse’s finances, Jeremy Vohwinkle, financial expert say.

According to him couples may not feel comfortable with total loss of financial independence that comes with a joint bank account, especially at the early stages in marriage. However with separate accounts, each spouse maintains their own finances and is only responsible for paying their share of the joint bills when necessary. If one or both spouses feel more at ease knowing they have their own money to do with as they please, pooling money in a joint bank account will cause less tension.

It is equally important to take each others’ income and earning potential into consideration and be wary of any potential resentment when stipulating how much should be contributed to the joint account, as it will be wrong for spouses who do not earn the same amount to contribute the same amount to the joint account, except if mutually agreed to, otherwise one party will have more to savour in his nor her individual account.

Finally, it all comes down to communication, be open with each other from the onset and talk about your money concerns. If one of you is bringing substantial debt into the marriage, don’t hide it. Be honest and come up with a plan for paying it off. No two people have identical values when it comes to money, and be open to your spouse about the personal account, as being secretive about it leads to distrust in marriage, says Jeremy Vohwinkle.

Ditch your resolutions — set financial goals instead 

We are already in second quarter of the year, and you might find yourself slipping on some of your resolutions. Maybe you’ve already given up. Just because New Year’s resolutions aren’t your cup of tea, there’s no reason to avoid setting financial goals. No matter the time of year, these are good to determine and achieve.

Here’s why setting financial goals can be a good idea:

Goals provide you with a focus 

Rather than setting a bunch of financial goals, decide on one aspect of your finances that you’d like to improve. Think about your financial priorities, and what you hope to accomplish.

Set a goal related to that priority. Your goal can help you focus on what you want your money to do — whether it’s boosting your retirement savings for the year, paying down debt, saving up for a down payment, or refinancing your home.

A financial goal gives you something on which to focus your energies. This focus can help you get more done. Map out the mini-goals that will lead to accomplishing your big goal, and then get to work. It doesn’t matter if you get off track a little bit, either. Use your goal to help you refocus and get back into it. Whether it’s January or May, you can always focus on improving some aspect of your financial life.

Goals help you measure your progress 

Without a benchmark, it can be difficult to say whether or not you’re improving. A goal can help you measure your progress. Set milestones, and then watch how you move forward. Being able to see your progress also has the effect of encouraging you to stick with it. When you’re discouraged, you can look at how far you’ve come, and then feel a renewed interest in moving forward again.

Make it a point to celebrate your milestones. You don’t need to have a big party or spend money on something expensive. But you can recognise how far you’ve come, and make it a point to mark the occasion with something a little extra. This gives you something to look forward to as you improve your finances.

Goals help you think long-term 

Your goals can also help you think long term. Too often, we think too much about the short term, and we end up missing out on the benefits of long-term financial planning. Setting financial goals can help you think ahead.

While you might want to work on one aspect of your finances in the short term, you can also incorporate these goals into your financial plan. Your efforts to make goals now can support your future. Make long-term financial planning a part of your efforts, and your goals can help you achieve your dreams.

Bottom line 

Goal setting can be an important part of financial management. While you might not want to overdo it in terms of New Year’s resolutions, it’s still useful to look ahead and use financial goals to help you improve your situation

 

ODINAKA MBONU