Having a joint account with your partner lets you pool your resources and align your spending and saving. But before you take the plunge it’s important to discuss your expectations.
Talk about expectations for your joint bank account
Combining cash requires you to be open about your finances from the beginning, otherwise it’ll only cause problems further down the line. Here are some questions to ask one another before you decide to make the move to joint finances:
- How much will you each deposit? Equal amounts every month or will one of you contribute more?
- What is the account going to be used for? Rent, bills, everyday expenses, holidays, emergencies only… ?
- Will you be free to make withdrawals or do you each get an allowance for personal spending?
- Will you still have separate bank accounts?
- Will you both have the freedom to do anything with the account or do you want to specify certain limits and actions where you must both give permission?
Set rules and goals
Unless you’ve agreed you can both have free reign with your joint account funds (which may not prove very productive financially), at least set basic spending and withdrawal limits. Also agree on some joint savings goals so you can celebrate together when you reach them.
Decide on a split
If you’re not ready to go all in with your joint finances, try using your joint account for your shared expenses and savings. It’s common for couples to each pay in a percentage of their earnings – so the higher earner contributes more each month. Or you might work out how much you need to pay in each month and agree a fair split based on your wages.
This way, you’re both contributing fairly to the household but you still have a sense of financial freedom when it comes to the remainder of your earnings.
Automate and keep records
If you’re using the joint account to pay rent and bills, set up automated payments where possible to make life easier. For the remaining payments, agree up-front who will be responsible for each one. Otherwise it’s easy for one to get missed because you both assumed the other person had sorted it.
Don’t forget your debt
If either of you has existing debt from a loan or credit card, decide whether you’ll pay this from your joint bank account – or whether it’s your individual responsibility. Also talk about other commitments such as child support.
Approach credit with caution
You might apply for credit jointly, whether it’s a mortgage, a car loan or a credit card. Be aware that you will still be liable for any debt in your name even if the relationship ends, so give this careful consideration.
Getting a joint account is a big commitment but it’s also an important milestone if you’re serious about your relationship. Just be upfront about your expectations from the beginning to minimise nasty surprises later on.
To recap: things to consider before you and your parter open a joint account
- Have an open discussion with your partner about all aspects of how your joint finances will work
- Decide what you will use the account for
- If you are going to keep separate bank accounts, agree how much each of you will contribute to the joint account each month
- Set basic rules for allowances or withdrawal limits and savings goals
- Automate payments where possible to avoid missing them
- Talk about any outstanding debts or regular commitments and where these will be paid from
- Be aware that if you get credit in joint names you will be jointly responsible for it – and have it against your name – until it is paid off
If you’re not sure on what rules to set for your allowances and savings targets then have a read of our recent blog on the 50/20/30 budget.