Should Couples Have Joint Bank Accounts? The Pros and Cons of Sharing Your Money

Pooling your money in a joint bank account may or may not be a good idea for couples! This list of pros and cons covers a wide array of money and love matters; it’s from personal finance writer Louise Tillotson. She describes several pros and cons of joint bank accounts for couples, and offers three things to consider for couples, love, and money…

“When you’re part of a steady, long-term relationship, you may decide a joint bank account is the thing to do,” says Tillotson. “But is it really necessary?”

For some couples, a joint account is not only necessary – it’s the easiest, most convenient way to manage money! But for other couples, a joint bank account is complicated, frustrating, and a potential financial disaster. To make better financial decisions as a couple, read Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence.

And, here are Tillotson’s tips for money and love…

Should Couples Have Joint Bank Accounts? Money and Love Matters

On the surface, a joint account seems like a good idea: you’re sharing your lives, so you may as well share your money, too! But while joint accounts have their benefits, they don’t suit everyone.

Here are some points to consider…

Pros (Benefits) of Joint Bank Accounts for Couples

Easier money management. A joint bank account can be an excellent way for a couple to manage their finances if they have similar ideas about money. Having just one account for all incoming cash and outgoing bill payments can make keeping track of household finances much easier than if they were spread across two different accounts.

More convenient access for traveling couples. If one partner regularly travels away from home, a joint bank account can be priceless. If the absent partner needs money, the partner back home can put money into the joint account to be instantly accessed by the absent partner. Otherwise, couples may need to transfer money between separate bank accounts, which can take time.

No loose ends for older couples. For older couples, a joint account can remove any financial difficulties if one partner passes away. If all the money is in a joint account, then the other account holder automatically gets ownership of it without having to go through probate. This makes money matters less complicated.

Cons (Drawbacks) of Joint Bank Accounts for Couples

Spenders versus savers may disagree! If you and your spouse have different views on handling money or wildly different spending habits, then a joint account may prove to be a bone of contention. One partner may feel annoyed at the other spending the money that should be set aside for bills and important purchases. This is one example of money and love matters causing problems in a relationship!

Credit scores may be vulnerable. If the joint account goes into overdraft and debts start mounting up, both partners will be liable for repayments. This could be very damaging to both partners’ credit scores as the debt will be recorded on both reports. If financial debts lead to bankruptcy, both partners will be affected.

Each partner is financially susceptible. Regarding credit scores, having a joint account will mean you’re ‘financially linked’ with your partner. If the worst happens and you break up, your ex-partner will still be financially connected to you. If he or she subsequently gets into debt, it could affect your credit score too. If your credit score is already an issue, read The Credit Repair Kit for Dummies – Tips for Improving Your Credit Rating.

3 Things to Consider for Couples Considering Joint Bank Accounts

How much does each partner make? A joint account is usually better if both partners are depositing roughly the same amount into it each month. If there is a vast difference between the two salaries, the higher earner may feel like their partner isn’t contributing enough, and this may lead to resentment and arguments.

Income taxes make a difference. Tax is another thing to consider. In many countries, people pay varying rates of income tax depending on their income. Interest paid from savings accounts is also included in taxable income. If a couple has a joint savings account, and one pays a higher rate of tax than the other, then both partners could be liable for more tax than would otherwise be payable.

Communication is key to joint bank accounts for couples. Imagine; a wife writes a cheque for $250, knowing there’s $500 in the account, but doesn’t inform her husband. He then takes out $350 the next day – and the check bounces. So if you’re going to have a joint bank account, talk about of ways to record and inform each of every financial transaction.

It might be a good idea to have both joint bank accounts and separate bank accounts. Both partners can keep a personal account which their wages are paid into, and transfer a certain amount into a joint account each month to cover any direct debits and standing orders for household bills. Separating love and money matters may create a healthier, stronger relationship!

To learn more, read Easing Financial Stress for Couples – 5 Tips for Money and Love.

LouiseTillotson  is a writer based in the UK. She writes personal finance guides for several financial websites, and is a contributing copywriter for moneysupermarket.com. Her areas of expertise include savings accounts, cash ISA accounts, credit cards and debt management

Related Articles:

1. How to Save Money to Buy a House – Money Saving Tips for Couples
2. How to Stop Lying About Money in Your Love Relationship
3. Easing Financial Stress for Couples – 5 Tips for Money and Love

Category: Financial Communication, Financial Debt, Financial Wealth, Love, Marriage, Money, Money & Finances, Money Personalities, Overspending