"Managing the Family Finances"
Jan. 25/03 Managing The Family Finances Should You Have Separate Bank Accounts, Or Will One Do? “Let's Talk…about Money” TM By: Paul Barton & Barry Spilchuk Is it better to have one main bank account for your family, or should each spouse operate from their own account? In our travels, we have occasionally been asked such a question. Sometimes, this question seems to arise when a husband and wife disagree on whether or not one main bank account is better than each spouse having their own account. One spouse feels his theory of operating one main bank account for the family is the more effective system and looks for validation for his theory, hence the question! First of all, in our opinion there is no right or wrong answer to the above question…either system can work effectively. The decision to maintain one account or two accounts for the family finances often derives from personal preference and comfort level on how the family finances should be managed. Pete and Mary maintain one main bank account where they each have their pay deposited directly into this one account. The mortgage payment, the car loan payment, and pre- authorized payments for insurance and retirement savings plans, all flow out of this account. In Pete and Mary's situation, Mary looks after the family finances and takes care of paying the bills. Mary finds it much easier to reconcile one bank statement each month and likes the idea of seeing all of the family income and expenses flowing through one account. As well, a monthly “discretionary allowance” is deposited into their own separate saving account, which allows Pete and Mary to spend or save their own money as they wish. Pete calls this his “mad-money” account. Before Pete was married, he never paid much attention to monitoring his personal finances. As long as he had money in the bank after he paid his bills; that was all that mattered. When he and Mary were married, Pete was more than happy to let Mary handle the family finances. For Pete and Mary, the one account system works fine! Another couple, Rick and Judy, prefers instead to operate from their own account separately. At one point, Rick and Judy tried to operate one main bank account, however there were many situations when one of them took money from the account without telling the other, or without recording the withdrawal in the cheque register. In one instance, this lack of communication resulted in their bank account being short funds and a cheque Judy wrote to a friend was returned non-sufficient funds. Judy was embarrassed Living the single life for a few years prior to marriage, Rick and Judy had developed a comfort level and a routine in terms of managing their own finances. With Rick and Judy each having their own preferred way of handling the finances, having one main bank account just didn't work for them! Rick and Judy now have their pay deposited directly into their respective accounts and have decided to divide the monthly expenses equitably. The mortgage payment and property taxes come out of Judy's account and all the other monthly utility and household expenses come out of Rick's account. Rick and Judy each wanted to be in control of their own finances. Their first priority was to ensure the bills were paid, and any money left over from their own paycheque was available for them to do as they each wished. Both Rick and Judy feel that operating their own account provides them with more control of their own finances. Whether you operate one account or two, as long as the bills are being paid, and as long as money is being set aside for short term and long-term goals…then it becomes a matter of personal preference regarding how the family finances are best managed. Bank account fees would be something to consider in your decision. Regardless of which type of bank account system you use in your family, here are three tips on how you might minimize bank account fees: · Use your own bank's automated banking machine rather than another institution's machine. This could save up to $65, or more, per year, assuming one withdrawal per week. · Investigate packaged services for bank account usage. Depending on your usage patterns, you could save money with properly suited packaged account services. · When paying your bills, either through the bank machine or at the bank wicket, bundle all your bills together and withdraw only one amount for the total. This means you would only have one cheque or withdrawal coming out of your account. “Even differences prove helpful; where there are tolerance, charity and truth.” Gandhi © Copyright 2003 Let's Talk LLC and Paul Barton