Separate or Joint Savings Accounts?

An easy guide to identify what type of bank account to use when starting a new chapter as a couple

So you are getting married soon? Congratulations!

Have you thought about how you will manage your finances after getting married?

Allow us to ask you a one seemingly simple question. Once you get married, will you have fully separate accounts, fully joint accounts or both? 

All these options have their own advantages and disadvantages.

Joint Account

Having joint accounts allows you to more easily manage your day-to-day spending and saving. It’s the most sensible way to start your married life. It also means that you have visibility on each other's spending which, for some, may not be a good thing.

A joint account is a co-ownership account and very useful for a family fund. In law, the share of joint account holders is presumed equal.

Another advantage of having a joint account is that if something happens to your spouse, the surviving account holder can easily access the funds in that account for the family's needs (typically, bank accounts are frozen upon the death of a person, so if the account is not joint, then the bank will need time to go through legal checks before releasing funds to the heirs).

According to the TRAIN Law taking effect this January 2018, all withdrawals will be subject to 6% withholding tax, which by the way is the new flat rate for estate tax.

Another case to consider is that if you decide to separate, the funds in a joint account can be tricky to sort out. The best thing to do is settle it between yourselves. But if there are complications ie., you can't agree on your respective shares, you can file a petition in court for judicial separation of your properties (Article 61, Civil Code of the Philippines).

Separate accounts

This option is typically taken when one spouse enters the marriage with loans, credit cards, alimony, child support or other debt.

Remember though, that having separate bank accounts doesn’t take away responsibility for either spouse. You still need to work out how bills will get paid, who is responsible and have frequent discussions to reconcile your accounts and finances.

Joint and Separate

This is probably a more common arrangement, where each of you has a separate account, but also have a joint account. Perhaps, every month, each spouse deposits money from their separate account to the joint account.

The advantage of this is that you can still maintain your own credit score. In a nutshell, every couple should discuss their finances in detail before deciding on which banking arrangement works best for them.

But it all boils down to TRUST.

Do you trust that your spouse will not judge you (or scold you) when you buy stuff?

Do you trust that he/she will be honest about how he or she uses the money?

Do you trust that your partner will not empty your account and leave you penniless?

Do you trust that both of you are looking towards the same goal when it comes to family finances?

If you’re not sure about any of the above, we highly recommend you discuss goals and expectations first. And then you can identify what vehicles can bring you there.

Marriage is a journey of a lifetime. But it pays to have a great start. Whether you choose fully separate accounts, fully joint accounts or both, Olivia app is a great guide when you start saving and funding for your dreams. More importantly, Olivia app can help you find the right company to invest your money. Learn more about Olivia app HERE.

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