Is sharing all your money matters with your partner wise? Financial expert explains pitfalls

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Some couples believe in sharing everything – even bank accounts. There are some sound reasons why this may not always be wise, though.
Some couples believe in sharing everything – even bank accounts. There are some sound reasons why this may not always be wise, though.
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For many young people who are just starting out on their own it makes sense.

You can't afford a car on your own so you agree to share one with your long-term partner. They'll take care of the monthly groceries and home contents insurance; you'll do the car repayments and vehicle insurance; and you'll split the petrol bill between the two of you.

"The market is very good for first-time property owners to buy," people keep telling you. So, after chatting to your partner, you agree to get a bond together.

Before you know it, you're buying furniture and appliances and an assortment of other things needed for the domestic life that you co-own without ever really keeping track of who bought what and when. And, as the years go by, it doesn't matter anyway because you'll never ever part, right?

Wrong. 

“While sharing all your money matters may have some romantic appeal and might offer financial benefits, it is vital that couples enter into this type of financial relationship with their eyes open to the potential risks it presents, the most important, and potentially devastating of which, is what will happen to your bank account or home loan if one partner passes away,” cautions financial expert Johan Strydom.

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When people enter into long-term relationships, they often embrace a ‘what’s mine is yours’, ‘collaborative’ approach, which does have its advantages – not least the convenience and cost effectiveness of a single shared bank account, or the ability to purchase a bigger property by pooling your income as co-applicants for a bond, but it’s important to realise that a shared approach to financial management is not without its risks, says the Product Head at FNB Fiduciary.

Johan uses the sharing of bank accounts as an example, saying if the primary account holder to such an account passes away, the bank is required by law to freeze the account until the estate of the deceased person has been fully processed.

“This requirement can be challenging for a surviving spouse or partner, even if they held separate bank accounts, but it is especially difficult in a joint arrangement because the surviving partner will be unable to access the account, or the money in it, for the full time it takes to wind up the estate.”

Co-applicants on home loans can face similar problems, he adds. “When one of the co-applicants on a bond passes away, it impacts the entire credit agreement with the bank, which means that in terms of the bond arrangement the total amount owing on the loan will need to be paid back to the bank.” 

In any of these scenarios, says Johan, the financial pressure placed on the surviving partner can be immense if adequate preparations have not been made and suggests making provision for when or if the unimaginable happens.

“If you have a bond, especially a joint one, make sure that both parties have adequate life insurance in place to cover the full amount of the bond.

“And don’t ever be tempted to cancel that life insurance later in life, before the bond is fully paid off. The older you are when a co-applicant dies, the more difficult it will be to refinance the loan or get credit elsewhere to pay it off.” 

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He also recommends that partners who only use one bank account also consider opening separate bank accounts and ensure that they have access to enough money to cover their essential expenses for a month or two if their partner passes away. 

“I’m certainly not suggesting that couples should not share their financial lives through shared accounts or bond co-applications,” Strydom emphasises. “I’m just stressing how important it is that couples who take this approach to their finances are aware of the risks and make the necessary arrangements to mitigate them.

"Nobody wants to think about the possibility that their partner may pass away. But if your money matters are so closely interlinked, it is essential that you do consider the possible repercussions and be sure that you’re prepared for them.”

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