Reader Q&A: Should I Open A Joint Bank Account With My Partner?
Ariana, age 27 asks...
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Today's question is from "Ariana age 27”:
Should I open a joint bank account with my partner?
Let’s look at the pros and cons of opening a joint account.
There are many exciting aspects of being in a relationship, and opening a joint account can be one of them. However, before you make that big change, here are some things to consider.
The pros
Liquidity. When you open a joint account, you're getting more liquidity from having a shared stash of cash.
Portfolio growth. As team players, you can grow your financial portfolio more significantly than you would if your portfolios were separate.
Better money conversations. Having a joint account invites more conversation around money. It allows for opportunities to manage money together and work as a team when it comes to your finances. Talking more about money can lead to better spending habits and planning for the future.
The cons
Opening a joint bank account may make you feel less independent. Constantly discussing finances with your spouse might make one of you feel like your independence is being compromised.
Also, if one person doesn’t have a good relationship with money, their bad spending habits or poor money management can put a strain on the relationship.
Debt and credit. If one person in the relationship is drowning in credit card debt and has a low credit score, it can negatively affect the other person's financial standing. This could become a problem when applying for a joint loan e.g. if you want to purchase a home together.
The relationship ending. Having joint bank accounts can become a real headache if a relationship or marriage ends. Each spouse has the authority to withdraw funds and shut down the account without needing the other's approval. In a messy breakup scenario, one spouse could walk away, leaving the other high and dry financially.
Consider your long-term goals
Joint accounts are more commonly created when couples get married. That said, whether you are married or not, it’s wise to have a conversation with your partner to ensure you’re on the same page regarding the future of the relationship.
Consider why you want to open a joint account in the first place. Would opening a joint account help you to better achieve a shared goal?
If you choose to set up a joint account, set guidelines for how you'll operate the account. Have a honest conversation with your partner before you set it up, and decide how much of your money is for the joint account and how much is separate.
Remember that if you decide not to open a joint account, that’s okay, too. You can still plan ways to incorporate healthy financial intimacy into your relationship.
A note on finances and relationships
Whether you opt for a joint bank account or prefer to keep things separate, one thing's for sure: communication is key.
Make it a habit to chat about money often to ensure you're both on board with your long-term financial goals—like saving up for a house or planning for retirement.
Using money as an icebreaker can actually be pretty helpful. And don't forget to budget for shared expenses, like rent or groceries.
When it comes to money matters, it's all about finding what works best for you two. So, take charge and manage your money to fit your relationship!
Remember, if you need more help managing your money, you can check out our completely free courses.