Choosing between joint and separate savings accounts doesn’t have to be a contentious issue. You can employ some fairly simple logic to determine if a joint savings account or a separate savings account will work best for you and your spouse or significant other. Here’s an overview of these types of savings accounts.
Only Open Joint Accounts If Your Relationship Is Extremely Stable
Nowadays, not all married couples choose to combine their individual savings accounts into joint savings accounts. Some couples, however, find it easier to budget their expenses with joint savings accounts. These accounts do carry an element of risk. If the relationship doesn’t work out, then there is a chance that one of the partners drains the account unbeknown to the other. Often, the partner that is less wealthy drains the account, but this is not always the case.
Only open a joint savings account with someone that you trust. Trust is essential to opening a savings account. Trust will bond the two of you together and help smooth out any differences. Since you’re both responsible to pay bills and pay debt, joint accounts will usually facilitate the trust and communication between partners. Sometimes, older parents open joint accounts with their children to help them manage their finances.
Choose the Right Signatory Option
The bank will also offer you a variety of signatory options. Generally, they will offer you the ‘either to sign’ or ‘both to sign’ option. In the ‘either to sign’ option, only one person has to sign in order to withdraw funds from the account or make other transactions. The ‘both to sign’ option requires that both parties give their consent before any transactions are made. You should only choose the ‘either to sign’ option if you trust your partner completely. This option does make transactions a lot more convenient.
Have a discussion with your partner before you open a savings account. Be sure that you both share the same goals for savings. You should both clearly understand the purpose of the account. Perhaps you have created the account to pay for utility bills, school fees, gasoline, or other expenses. Or, maybe the account was created to pay for rent. Either way, both parties need to be absolutely clear regarding the nature of the account.
Be Clear About Spending Habits
Also, it’s important to keep the lines of communication open regarding spending. One partner may be better at keeping records. If so, he or she should keep detailed records of tax invoices, receipts, and bank statements. Also, each person should constantly inform the other about major withdrawals. This will avoid any potential conflicts.
Sometimes, people will try to bully you into opening a joint bank account. Don’t let this happen, and don’t cave in to the pressure. Only open a joint bank account if it will benefit both you and your co-signatory. You need to look out for yourself, even if that means you might offend your potential co-signatory.
That being said, joint bank accounts can really help married couples keep track of expenses and budget their funds. Consider a joint bank account if both of you trust each other completely and want to facilitate your transactions.