Managing the Family Finances

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					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

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
       · Investigate packaged services for bank account usage. Depending on your
           usage patterns, you could save money with properly suited packaged account
       · 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.”

© Copyright 2003 Let's Talk LLC and Paul Barton

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