Banking with partner

MrChips

Hello,

Whilst this is not strictly a "money saving" query, I thought I would try and tap the collective expertise on the forum.

In February, I will be moving in with my girlfriend - this is the first time I will have lived with a partner. I am very much looking forward to it, but am wondering what the best way will be to manage our finances. Should we put all our incoming money in a joint current account, should we maintain (at least a little) financial independence and operate our own current accounts and pay for our own purchases out of this - or some sort of halfway house whereby we set up a separate account and both make monthly contributions from which household expenditure comes.

I'm sure there is no right answer to this and different options will work for different people. I am just looking for different perspectives or possible interesting ideas which I haven't thought of.

As a bit of background, I earn about twice what she does but we both work full time. We will be renting with a view to possibly buying our own place further down the line if everything works out ok. She is in her early thirties, I am late twenties. We are both quite careful with money and are savers rather than spendthrifts!

From a tax perspective, can I put all my savings in her name to get away with only basic rate tax on interest (or is this only an option for married couples?). I trust her not to do a runner

Thank you

jonesMUFCforever

Putting your savings into her name means it becomes her money.
All well and good now but if you hit the skids!! Well need I say more.

As for day to day things and bills a joint account makes sense.

dexters_mum_2

When my now husband moved in with me we had our individual accounts and a joint account and household expenditures came out of that and our own personal spending came out of the money left in our sole accounts.
After a while it became a bit messy, so we had our salaries paid into our joint account, paid all the bills, then split the surplus into our sole accounts, rather than the other way around.

As I am a student I have my own student account where my loans and grants go in and becomes our contingency, I have my individual savings of around £12k in a high interest, sole savings account, hubby has no savings.

We're now considering, as we're married, going along the lines of not having sole accounts but only having one, joint account, but it scares me because he's a bit of a spendaholic but at the end of the day, if you trust one another, you'll come to an arrangement that suits you both and enables both of you to contribute fairly to all the expenses.

My one piece of advice, always keep your savings in your own name!

bristol_pilot

ejones999 wrote:

Putting your savings into her name means it becomes her money.
All well and good now but if you hit the skids!! Well need I say more.

As for day to day things and bills a joint account makes sense.

And any debt she runs up is yours. Nice. As this is a money saving site not a relationship site, the advice surely has to be not to enter into a financial partnership with ANYONE.

dexters_mum_2

bristol_pilot wrote:

And any debt she runs up is yours. Nice. As this is a money saving site not a relationship site, the advice surely has to be not to enter into a financial partnership with ANYONE.

Worth heeding this advice and ensuring maybe, if you have a joint account, you don't have an overdraft!

Have you also considered what would happen if one of you were out of work, are you going to have a contingency fund? (should be about 3 months worth of rent/bills/house money) are you going to contiribute equally together or will you 'pro-rata' it out?

Also, I know this isn't what you'd probably want to consider, but what would happen if you split up in terms of money and in terms of bill paying.

realaledrinker

Only a personal view but we have always had a joint bank account & savings too except for ISAs, which we regard as 'our' money rather than 'his/hers'. I think there must be a little bit of something missing in a relationship that keeps finances separate.

I wonder if there is some research somewhere that correlates divorces with whether or not the couples kept their money separate from each other. Just a thought!

jillie1974

when we moved in we kep our own accounts but had a household account for the bills, rent etc
we both contributed the same amount and then what was left over was yours to spend however you wished
worked really well for a while till RBS messed up a diretc debit :mad: but thats another story
Best of luck!!

moneyandmountains

If you each have different tax status, then it may be worth keeping your accounts separate (certainly keep your savings accounts separate).

As to whether to have a joint account as a sole account or not, it depends on how complex your financial affairs are.
If you are running Regular Savers funded from individual savings, then it may be easier to have individual current accounts that fund these - even if you have a joint account for household things.
A similar argument applies if you are doing matched betting, see Gambling Introductory Loopholes.
This means that it is easier to separate out transactions and you can ensure that suddenly all the money that is scheduled to move into savings is used to mistakenly pay off the credit card a week early.

Edit:
If one of you has a bad credit history, then under no circumstance open any joint account / credit card etc. This will create a financial link between you and mean that both of you will have problems getting credit.

MrChips

Thanks for all the replies.

Regarding putting the savings in her name, as we are not married, can I actually effectively gift her several thousand pounds? Is there not a limit on the amount I am allowed to transfer to her?

I still haven't decided about this by the way, still weighing up the tax savings against the "loss of control"

I think my personal preference going forward would be to open a new account into which we both send, say, £700 a month to cover rent, utilities, council tax etc and hopefully there will be enough there also to cover groceries and other household expenditure. We can then go out and carry on as currently with our own leftover cash e.g. i tend to pay for the cost of us both going out, but she buys her own clothes, shoes etc.

And starting a joint savings account for future contributions also sounds like a great idea

Regarding opening a joint account vs opening a single account with an extra card for her. What are the pros and cons? I have a fairly good credit rating (rarely turned down for applications) and she doesn't have a bad one although she hasn't lived in the UK for that long so she does struggle with credit applications - although she now has 2 credit cards so things are improving.

As far as I can see, there is no advantage of opening a joint account over one in my name with her as an additional card holder. But there is the disadvantage of our being able to tarnish the other's credit rating. Am I right?!

nh101

I think it helps if one person takes control of all the finances. You can control a saving account even if it is in her name as long as you know the internet access codes.

My husband and I have a joint current account and our wages get paid into that. That is our "bills" account. DDs such as gas and council tax come out of that.

Each month we transfer money from that account into seperate savings accounts for "Food", "Petrol", "Holidays", "Christmas", "Car Maintenance", "Football Season Ticket" etc.

After calculating what goes in to the bills account versus what comes out every month we have £700 left. We take £200 each for our own current accounts for us to spend as we wish (actually I have to give hubby's to him in his hand each week because he can't be trusted not to overspend with his debit card!). £300 goes into another current account for which we have a debit card and that is our "going out" money for the month to spend on restaurants, cinema and anything else we need.

We did this even before we were married and it works really well. It means that one person (me in our case) is always on top of all the money, and there is enough to pay every bill (MOTs, Christmas etc) whenever it is needed. There is no feeling that one is getting more than the other and we decide together how every penny is spent (except for the £200 which is ours solely each month, which gives us a bit of independence and means we don't get bitter if one spends £150 on shoes one month - as long as it is out of their £200!)

My husband earns three times as much as me as well. Before we used this system it was very difficult to keep track of what had been paid for, how much money we really had etc. One of us would feel loaded when the other thought we were in dire straits. This way is much better!

I would feel uncomfortable about a system where one "paid for meals out" and the other "paid for their own clothes". I think it is better to decide between you at the start how much money is going to spent on things like restaurants and clothes each month - have a budget for the both of you and stick to it, no matter whether you have a joint account or not.

nh101

MrChips wrote:

Regarding opening a joint account vs opening a single account with an extra card for her. What are the pros and cons? I have a fairly good credit rating (rarely turned down for applications) and she doesn't have a bad one although she hasn't lived in the UK for that long so she does struggle with credit applications - although she now has 2 credit cards so things are improving.
right?!

Are you worried that she cannot be trusted to keep your credit rating safe, or that she won't be accepted as a joint accout holder. If her credit rating is OK she should be accepted by a bank for a normal account, and if I was her I would be really offended if you didn't want to have a joint account. It is like you are treating her as a kept woman.