Should Couples Have A Joint Bank Account? An Expert Says Yes, But There’s A Catch
When it comes to marriage and money, picking the right partner has as big of an impact on your financial future as just about anything else. That doesn’t mean you should marry for money over love, but it means that if you pick someone who is terrible with money, you could end up in financial peril. That is why a question we often see is: should couples have a joint bank account? The answer isn’t as simple as yes and or no.
So Should Couples Have A Joint Bank Account?
Simply put…Yes.
More complicated answer… It should not be the only account they have.
While being able to see all of the money your partner is bringing in or sending out seems very important, sharing only one bank account could have an unhealthy affect on your relationship as well.
For instance, if one partner makes significantly more money, it can cause an imbalance of power. That could also lead to other issues if the person who makes less spends money more recklessly.
What is the solution?
Simple. Three bank accounts (or more if you include a joint brokerage account or other joint investment accounts). Each of you should have a checking account and then your joint account could be another checking account or savings account.
Suze Orman agrees with this approach, per Next Advisor
“It depends on what you have coming into the relationship, but I would absolutely recommend that you have at least three accounts: one for you, one for your partner or spouse, and one joint account where you pay the joint expenses out of it.”
That approach is great, but having three checking accounts might not be for everyone. You can simplify this by splitting up bills and paying them from your two personal accounts. And then, have your joint account act as a savings/emergency fund account.
Example:
- Partner 1: Personal checking account
- Partner 2: Personal checking account
- Joint: Savings/Emergency Account
- Joint: Brokerage Account
This way, if one person in a relationship cares more about actively managing the finances and investing, the other partner only needs to pay the monthly bills they are responsible for and then deposit a predetermined amount into the joint savings account every month.
From there, the money can sit in the savings account for an emergency or be deployed into the joint brokerage account. But we do find that this is a good practice to have. If your shared goal is to save and invest $2,000 per month into your brokerage account, then both partners should contribute their share every month. Treat it like a bill. Pay that $1,000 and only after that can you spend on “wants.”
How To Open A Joint Bank Account
As mentioned, opening a joint account can be a great way to combine resources and make managing finances easier. To open a joint bank account, both parties will need to provide their personal information, including Social Security Numbers, valid ID, and proof of address.
In addition to that, you will also need to decide which type of account you would like to open and which financial institution you would like to use. After filling out the application and meeting the requirements, both parties will need to sign the necessary documents to officially open the account.
Yep, it’s that easy.
Are There Benefits Of Having A Joint Bank Account?
The major benefits of having a joint account are increased access, shared responsibility, and easier budgeting.
Joint accounts provide both parties with easy access to funds, eliminating the need for one person to rely on the other for regular payments. Additionally, having a joint account means that both users are responsible for any transactions made, encouraging accountability and important financial conversations.
Finally, joint accounts can help both parties better manage their finances, as each person can track their spending and make budgeting decisions together.
What Are The Disadvantages To Having A Joint Bank Account?
Joint accounts come with some disadvantages that should be taken into consideration before opening one.
First, both parties have access to the account and any funds stored in it. This can lead to disputes if one party attempts to use the funds without the other’s agreement. Moreover, if one of the parties has a poor credit history or is in financial difficulty, it could have a negative effect on the other party’s credit rating or financial standing.
Second, if either party passes away, the account may be frozen or closed, making it difficult to access the funds. This could be a particular problem if the account is used as a savings or investment account.
Finally, it is important to remember that both parties are legally responsible for the debt on the account, if any. Therefore, it is best to consider all potential risks and discuss them with the other party before opening a joint account.
Conclusion
Even when you are working with your partner or spouse towards a common financial goal (like financial freedom) it is important to maintain some level of independence with your finances.
Ultimately, this is a very personal decision and finding what works best for you, your partner and your budget is the way to go. Because everyone’s situation is different. If you married a chronic spender, it might be a good idea to share all accounts for the sake of accountability and transparency.