Smart Tips for Balancing Joint Accounts and Personal Spending

One of the most fundamental financial decisions you will make as a couple is how you treat your money. Will you treat it as a joint asset or manage it separately? Traditionally, couples often share joint checking, savings, and investment accounts. Many financial planning professionals agree that this arrangement can help build trust as you merge your finances, assets, and financial futures.

However, some couples opt to keep their assets separate. They may have substantial assets, income, and even debt that they want to manage and control independently. Or perhaps you or your significant other/spouse had a major disparity in assets and income in a prior relationship, and money was a driving factor in the dissolution of that relationship. In those cases, separate accounts could be appealing.

As fiduciary financial professionals in Buffalo Grove, we help individuals and couples create budgets, financial plans, and investment strategies that address their specific financial and personal needs. Regardless of your chosen tactic, a delicate balance requires careful planning and open communication to maintain harmony and make the right financial decisions. 

Family Financial Planning: Advice from a Buffalo Grove, IL CFP® Professional

Start With the Right Foundation: Financial Planning

Whether you and your partner choose joint or separate accounts, you both should be on the same page regarding how you’ll manage your wealth and expenses as a couple. The best way to do this is by developing a comprehensive financial plan jointly and ensuring it addresses the goals and wishes of both parties.

Many people think that financial planning only includes creating a financial budget, which is a wrong assumption. A better way to think about financial planning is to compare it to mapping out a cross-country road trip. 

You start by figuring out where you want to go, say a comfortable retirement with financial security late in life. Then, you chart the best route to get there, considering all the possible detours and obstacles you may encounter along the way (like taxes, market fluctuations, and unexpected expenses). 

As you go, you check your progress, adjust your course as needed, and ensure you have enough fuel (money) to reach your ultimate destination. Just like a good roadmap and a well-maintained car is essential for a successful road trip, a solid financial plan and regular check-ups are crucial for pursuing your financial goals.

Comprehensive financial planning typically includes:

• Budgeting and Cash Flow Management: Monitoring your income and expenses to ensure you are building a solid financial foundation.

• Investment Planning: Developing a strategy to grow wealth through various investment options that are appropriate for your unique needs, goals, and investing preferences.

• Retirement Income Planning: Ensuring you will have enough resources to retire when you want to and live the way you desire to for the rest of your life.

• Tax Planning: Minimizing your tax liability through efficient planning and strategic decision-making.

• Estate Planning: Preparing for the eventual distribution of your assets to ensure your wishes are carried out and your loved ones are protected.

• Risk Management and Insurance: Identifying potential risks and determining the right insurance coverage to protect against those risks.

• Education Planning: Saving and investing to cover the cost of education for yourself or your children.

Before merging any finances, it’s critical to understand and respect each other’s financial goals and habits. This understanding forms the foundation of trust and cooperation for managing joint accounts. Buffalo Grove financial planners recommend regular financial meetings to discuss goals, progress, and any adjustments that need to be made to stay on track.

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Set Clear Guidelines for Spending

Balancing joint accounts and personal spending habits starts with clear guidelines. Decide what expenses will be paid from the joint account and what will remain separate. Common joint expenses include mortgage payments, utilities, and food, while personal spending might include hobbies, healthcare, transportation, and other personal expenses. Consider working with a Buffalo Grove CFP® professional to help establish these guidelines based on your unique financial situation and goals.

Maintain Personal Financial Freedom

Even if you use joint accounts, many couples have individual accounts for personal saving and spending. This allows you and your partner to be financially independent and reduces the stress of discussing every purchase. Having some form of financial independence may be important for a healthy relationship.

Regularly Review Your Financial Plan

Life changes, and so should your financial plans. Whether you’re expecting a child, changing jobs, or approaching retirement, regular reviews with a Buffalo Grove financial advisor can help you adjust your plans to fit your current situation. 

This includes revising your joint and individual spending to minimize the impact of the retirement risk zone, a critical period during which financial missteps can have long-lasting impacts during your retirement years.

Leveraging Financial Education

It’s not uncommon for one partner to be more comfortable with financial topics than the other. But it’s equally important that both partners have a working knowledge of their individual and joint financial situations.

After all, knowledge is power, especially in personal finance. 

Our ongoing financial education tools and services at SGL Financial can help you and your partner make informed, objective decisions. This doesn’t mean you have to become a financial wiz. Still, you can leverage sources like SGL Financial’s podcast, where our financial professionals offer insights and tips on everything from tax strategies to investment advice, helping you stay informed on the best practices for financial management.

Why Consider SGL Financial?

We understand that every couple’s financial situation is unique. Whether you prefer to manage your money through joint accounts, separate accounts, or a combination, our experienced Buffalo Grove financial advisors are here to help you create a tailored financial plan that works for both of you.

We start by getting to know your individual and shared financial goals, assessing your current financial status, and understanding your spending habits. From there, we help you determine the best way to allocate your funds—whether combining your finances, keeping them separate, or finding a middle ground that suits your needs.

Let’s work together to make your financial goals a reality with a plan that fits your unique relationship. Contact us today to start your journey toward financial harmony and success.